Vistry announced on Monday that it is set to buy Countryside for a cash and share offer of £1.25billion if the merger is approved by shareholders. Chief executive, Greg Fitzgerald, has vowed to keep the Countryside brand and announced that senior Countryside executives, including chief finance offer Tim Lawlor, will come across with the deal.
Fitzgerald said the acquisition of Countryside will diversify Vistry’s focus, split between traditional private housebuilding – through the Bovis, Linden and now Countryside brands – and partnerships housebuilding through Countryside and Vistry’s existing partnerships operations.
Fitzgerald said: “Don’t underestimate the power of Countryside brand, it is still a five-star housebuilder with a very good reputation. Countryside is still a very well thought of organisation. Hence, we’re keeping the brand and [are] delighted that we’ve got some great leaders coming over from Countryside to join the business.”
According to a presentation by Vistry, the merger with Countryside will result in increasing its operating profit in its housebuilding division from £305million to over £400million annually, and growing its profit from partnerships by 500% to more than £400million each year.
Vistry anticipates generating £50million yearly in “synergy” cost savings from the deal, and also highlighted the quality of Countryside’s strategic land bank which became apparent during due diligence between the firms.
Fitzgerald has made it clear that the merged operation would retain the option to split into standalone operations in the future, focusing on private housebuilding and partnerships housebuilding operations separately, although he also stated that he “believed in the model” and that this would not be his preferred outcome.
Usman Nabi, founder and chief investment officer of major Countryside shareholder Browning West, said that the deal would: “unlock significant long-term value for Countryside’s shareholders”, adding that “Greg Fitzgerald has one of the best track records of operating performance and value creation in the UK housebuilding sector, and we have great confidence in his ability to successfully integrate Countryside and lead the combined company as it continues to grow”.
Fitzgerald’s statements concerning the Countryside deal came as Vistry announced that half-year revenue was up 3% to £1.16billion, and completions were up 5% to 5,409. However, its interim pre-tax profit fell sharply following a £71.4million provision for legacy buildings repairs. The company signed the cladding pledge with the government, promising to repair all buildings with fire safety issues dating back 30 years without recourse to public funds. With this provision omitted, pre-tax profit was up 14% year on year to £190million.
The business said that “adjusted” pre-tax profit, not including the provision, was up 14.3% on the previous year to £190m.
Fitzgerald said: “The group has delivered an excellent performance in the first half, significantly exceeding our expectations at the start of the year. Operationally we are in great shape, and with our leading capability across all housing tenures, are very well positioned to maximise the broader market opportunity in the coming period.”
