FTSE-100 housebuilder Persimmon weighs £1bn bid for rival Cala | Business News

One of Britain’s biggest housebuilders is exploring a £1bn takeover bid for Cala Group, a rival player in the sector which has been put up for sale.

Sky News has learned that Persimmon, which has a market value of £4.74 billion, is tipped to submit a bid for Cala before the tender deadline next week.

City sources said it would be a strong candidate to buy Cala, whose homes have a significantly higher average sale price than those in Persimmon.

Insiders expect Cala, which is being auctioned by Legal & General (L&G), to have a price tag of around £1 billion.

If Persimmon is successful in the auction, it would mark the York-based company’s biggest acquisition in years.

Under Roger Devlin, its chairman and chief executive Dean Finch, the company’s share price rose more than 20% last year.

In a trading update last month, Persimmon said it was on track to deliver growth in new homes completed this year to up to 10,500.

The Cala auction takes place in the midst of a general election campaign in which new housing supply is expected to play a prominent role.

Both major parties are likely to establish new policies to stimulate growth in housing construction, according to sources.

Analysts said this weekend that other construction companies should also consider bids for the L&G-owned company.

That could include, they said, Persimmon’s biggest rival Taylor Wimpey and Avant Homes, which is owned by Elliott Advisors and Berkeley DeVeer.

Persimmon is the UK’s third largest housebuilder by market capitalization, behind Taylor Wimpey and Barratt Developments.

Both Persimmon and Taylor Wimpey were among eight builders named by the Competition and Markets Authority in February over suspicions of having exchanged commercially sensitive information.

The acquisition of Cala by another major housebuilder would underline a new push towards industry consolidation, after Barratt Developments revealed a £2.5bn deal to acquire rival Redrow.

The potential sale of Cala represents the first significant strategic move by its new chief executive, Antonio Simões.

Rothschild bankers are overseeing the auction.

Simões described Cala as “a very strong business” during an earnings call earlier this year, in which he was asked about the construction company’s future ownership.

L&G took full control of the business in 2018.

Cala reported a drop in half-year profits last fall, citing a “challenging market.”

The company has a long-term goal of building 3,000 homes annually.

Persimmon and L&G declined to comment Saturday.