Taylor Woodrow Share Discussion Threads

[judge jury] 24/4/2007 12:57

FOCUS UK Housebuilders plunge due to interest rate fears, not Spanish market
24 April 2007
AFX International Focus

LONDON (Thomson Financial) - This morning's tumble in UK housing stocks led initially to the assumption that the current carnage in the same sector in Spain was driving the mass sell-off: but the two may be unrelated, analysts told Thomson Financial News.

Sector leaders Persimmon PLC and Barratt Developments PLC were down 2.77 pct and 2.19 pct respectively while the pair earmarked for a huge merger, Taylor Woodrow PLC and George Wimpey PLC, were down 2.61 pct and 2.81 pct.

Of the middle-ranking housebuilders Bovis Homes PLC and Redrow PLC were also down more than 1.5 pct, but the real victim was Bellway PLC, which fell 4.5 pct to 1506 pence.

The natural culprit for the panic would seem to be the Spanish market, which has been tipped for a major correction over the past few months. Property stocks there fell sharply this morning and took down with them most of the construction sector, amid fears that the real estate bubble may be about to burst.

Up to seven real estate stocks fell around 20 pct, led by the continued slump in Valencia-based developer Astroc, which has lost nearly 75 pct after multiplying its value several times over the last year.

The news meant that small contractors with strong interests in real estate fell quite sharply, while bigger ones fell an average of 3-4 pct, with Sacyr and Acciona among the worst performers due to controversies in their Eiffage and Endesa bids.

Analysts conceded that UK contractors would be watching the developing slowdown in Spain with interest. 'If there is panic in Spain, that is something the sector players over here, even if without sizeable interests down there, will want to keep an eye on,' said one.

However, they also believe the real cause may be a delayed reaction to fears of higher interest rate rises than have been anticipated in recent months. After consumer price inflation reached 3 pct in December many housebuilders factored in a rate hike but since then many have assumed that interest rates might stabilise at no more than 5.5 pct, as inflation eased off amid lower UK energy costs.

However, following last week's revelation that CPI is now up to 3.1 pct, the Royal Institute of Chartered Surveyors issued a warning that interest rates could rise more than 5.5 pct.

'People are getting more used to the idea that on interest rates we're going to be finishing nearer 6 pct than 5 pct,' said David Stubbs, senior economist at the RICS. 'We were suspicious that most people were calling five and a half as the peak. Most people agree now that the 5.5 pct rise is a done deal for May, but I would not be surprised at all if by the end of the Summer we're at 5.75 pct.'

Today's bloodbath may be a belated realisation that housing stocks will face a tougher ride later in the year. However, the RICS doubts a huge correction in the UK as may be happening now in Spain for two reasons.

Firstly, the UK market is hugely constricted by its planning system, which acts to stop builders oversupplying the market in boom times. Although this restricts supply it also stops huge gluts of unsellable stock lurking about as has happened in the US market. It therefore means that corrections to the UK market can be less painful.

But the more immediate reason is that CPI is expected to fall.

'It's doubtful we'd get to 6 pct because to do so they'd have to be raising interest rates when the CPI will be falling quite fast towards 2 pct in Q3 and Q4,' Stubbs told Thomson Financial News.

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[markpun] 24/4/2007 10:05

Could it be Stops being taken out?

[judge jury] 24/4/2007 10:05

Dont know. However, if PSN launched a decent bid for TWOD, I would expect WMPY to plummet and PSN to fall a bit too (given the acquisition risks and need for a share issue).

[markpun] 24/4/2007 10:02

Judge,

Do you know a reason for the hard fall on such low volumes? I searched but can not find negative news.

Cheers.

[judge jury] 24/4/2007 09:49

WMPY being hit hard! PSN down too!

[8gamsby] 24/4/2007 00:33

Surely planning permission does not come easy nowadays TWOD have a highly valued ready made 3 TO 4 YEARS WORK guaranteed.Ithink PSN will go for TWOD

[8gamsby] 20/4/2007 14:37

Perhaps now a few sweetners will be thrown our way.Which should have happened in the first place

[judge jury] 20/4/2007 09:35

Persimmon Declines To Comment on Wimpey Bid Speculation
20 April 2007
Dow Jones International News

LONDON (Dow Jones)--U.K. house-building firm George Wimpey PLC (WMPY.LN) has received no further takeover approaches, a person close to the company told Dow Jones Newswires Friday.

The company, which has agreed a nil-premium merger with Taylor Woodrow PLC (TWOD.LN), said in a statement Friday that there would be a short delay in posting its scheme document to shareholders for the proposed merger.

But a person familiar with the situation said the delay wasn't linked to any further bid approaches.

The U.K.'s largest house-builder by market capitalization, Persimmon PLC (PSN.LN), which has been suggested in press reports as a likely bidder, declined to comment.

At 0741 GMT, Taylor Woodrow shares were up 13.75 pence, or 2.8%, at 510.75 pence, and George Wimpey was up 7 pence, or 1.1%, at 623p. Persimmon shares were also up 11 pence at 1,415 pence in a slightly higher London market. [ 20-04-07 0754GMT ]

The Times of London Friday reported that rival suitors for Taylor Woodrow have asked several leading City investment banks to weigh up the GBP2.95 billion house-builder.

It cited people close to the suitors as saying they would await the merger documents from Wimpey and Taylor Woodrow before making a move.

The merger documents are due to be posted to shareholders in early May, slightly later than planned due to the Easter bank holiday.

[judge jury] 20/4/2007 09:23

Looks like a game of chicken and egg going on. TWOD/WMPY waiting for PSN to show their hand. PSN waiting for TWOD/WMPY to reveal the revised merger details. It wouldnt surprise me if the merger turned into an acquisition (perhaps of WMPY by TWOD). Certainly, they are going to have to introduce a lot of cash into the deal somehow.

[spob] 20/4/2007 04:42

From The Times

April 20, 2007

Persimmon poised to gatecrash merger

James Rossiter, Property Correspondent

Persimmon, Britain's largest housebuilder, and private equity firms are preparing to gatecrash the proposed £5.5 billion merger of George Wimpey and Taylor Woodrow.

Rival suitors for Taylor Woodrow have asked several leading City investment banks over the past week to weigh up the housebuilder, which has a £2.95 billion market value.

Sources close to the suitors said that they would await the merger documents from George Wimpey and Taylor Woodrow - due in the next four weeks - before making a move.

Persimmon is being advised by Citigroup, but it is thought that the FTSE 100 housebuilder may appoint another financial adviser.

Sources said that the potential suitors are prepared to wait several weeks before mounting a formal bid, in the hope that the deteriorating US housing market will force both Taylor Woodrow and Wimpey to write down further the values of their US landbanks. That would affect any offer price.

One investment banker said that Taylor Woodrow would be a more attractive acquisition. "Wimpey just does not have the landbank [in the UK] whereas Taylor does," he said. "Wimpey has the higher margins so, in a way, there is less room for improvement from buying Wimpey."

Potential venture capital suitors could include Permira and Barclays Private Equity, whose consortium lost out last year in the £1.1 billion battle for McCarthy & Stone, the retirement homes builder.

Persimmon is understood to be attracted to Taylor Woodrow's UK landbank, worth about 4.5 years of supply.

Last year Taylor Woodrow sold 8,294 homes in the UK. Persimmon, which has traditionally shunned overseas operations, would be expected to retain Taylor Woodrow's North American business. Last year nearly half Taylor Woodrow's sales came from the region, where it sold 4,492 homes.

A Taylor Woodrow-Wimpey combination promises cost savings of £70 million a year. A Persimmon-Taylor Woodrow combination should save more.

[judge jury] 18/4/2007 08:39

BWY seems more cautious on the UK market than in previous years. If PSN shares these views then they may be relucant to pay top dollar and gear up significantly at what might be a peak in the market (and take on a difficult US market at the same time)

Bellway sees cooler housing market
By TOM GRIGGS
18 April 2007
Financial Times

Bellway pointed to a "stable but competitive" house building market, although it cautioned it was not experiencing the 9 per cent house price inflation signalled by mortgage lenders.

"The feeding frenzy of a few years ago has ended," said John Watson, chief executive of the Newcastle upon Tyne-based housebuilder.

"The market could not have kept pushing two or three times wage inflation. For the growth to be sustainable, there had to be a bit of a slowdown and that has to be good for the long-term health of the sector," he added.

Bellway, which builds 85 per cent of its developments on former industrial sites and focuses on the cheaper end of the market, saw a 10.3 per cent increase to 3,264 in houses sold in the six months to the end of January.

Pre-tax profits rose 15 per cent to Pounds 100.8m on revenue up 14 per cent to Pounds 576.5m. The average selling price rose 4 per cent to Pounds 173,300, although Alistair Leitch, finance director, said this was more down to the type of house being built.

Mr Watson added that the group was performing particularly strongly in London, the north-east and Scotland, while the Midlands, Wales and the north-west were notably weaker resulting in more incentives such as free carpets and no stamp duty.

"There are too many high rise apartment buildings in cities such as Birmingham, Leeds and Manchester so we are moving away from this type of product," said Mr Watson.

Earnings per share rose to 61.7p (54.1p) and a final dividend of 16.45p (14.3p) is proposed to make a total of 34.5p. The shares fell 59p to Pounds 16.17.

FT Comment

*By focusing on forward sales, Bellway has excellent earnings visibility. A strong presence in the Thames Gateway and regeneration schemes in Yorkshire, the north-east and north London will help the group take advantage of demand for affordable housing. Margins are still in the upper quartile of the sector at 18.7 per cent and the group has excellent land holdings. Bellway is rated at 11.7 times 2007 estimated earnings - close to the sector average. It may shy away from consolidation-led valuations, but Bellway is a well-run business focused on a growing segment of the housing market.

[judge jury] 13/4/2007 11:42

WMPY is still trading at about 9% below the implied merger price, suggesting there is still plenty of speculation that PSN will bid for TWOD ... and TWOD's UK assets are obviously attractive to PSN.

I myself am a bit confused, since Peter Johnson's purchase of TWOD shares this week would seem to rule out a PSN bid (unless I am missing something). Also, PSN have got to be pretty scared of TWOD's US business, given the continued bad news from other housebuilders over there.

The formal merger documents should be coming out soon. It will be interesting to see if the terms of the merger change at all. There has to be a decent chance of a return of capital being introduced.

Assuming no PSN bid, the c.540p price will in my view depend on (1) whether there is a return of capital and (2) a rerating of the merged business, which presumably wont happen until (a) the merger beds down and integration risk reduces and (b) there is better news from the US market.

[8gamsby] 12/4/2007 20:59

So is it a done deal or is anyone else waiting in the wings.If the merger goes ahead can we still expect the share price to be around £5.40

[judge jury] 11/4/2007 10:53

Interesting to see the CFO spend more than £300k on TWOD shares. The RNS says it is associated with his 2006 bonus. Again, I would think this suggests that PSN are not currently sniffing around.

[bigbertie] 10/4/2007 10:10

nigelb - but if they had had inside knowledge of a planned bid they would not have been allowed to trade shares

[nigelbarker] 10/4/2007 08:43

the article didn't mention the end of the tax year, the sales were tiny compared to their holdings. purely year end tax move.

[judge jury] 10/4/2007 08:06

Looks like the merger will go ahead after all

Persimmon wimps out Royal Exchange
BY HELEN POWER
8 April 2007
The Sunday Telegraph

MARKET watchers hoping for further action from the house-building sector are in for a big disappointment.

We can now as good as confirm Persimmon will not gatecrash the proposed merger between Taylor Woodrow and George Wimpey, or indeed mount a bid for smaller rivals, Bovis and Redrow.

As of Thursday Persimmon effectively ruled itself out of any significant corporate move when chairman John White, chief executive Mike Farley and finance director Mike Killoran, for reasons known only to their piggy banks and the taxman, sold nearly 200,000 shares in the company.

Persimmon has been tight-lipped about its expansionary intentions, but would management really expose themselves to regulatory scrutiny by dealing in company shares when they were about to launch a bid? A disappointment this may be, but not for those involved. At pounds 14.38 a share White will walk away with pounds 1.6m, Farley with pounds 719,000 and Killoran with pounds 431,400.

Meanwhile, the party goes on for Wimpey and Taylor Woodrow. Peter Redfern and Peter Johnson are in the States touring their companies' respective operations. Given the current state of the market on the other side of the pond, we wish them luck.

[8gamsby] 07/4/2007 21:42

I hope PSN do join the party at least we will then see some money on the table.At the moment i think a takeout price for TWOD would have to be between £6-£6.30.TWOD/WMPY SHOULD have offerred a sweetner right from the off.

[judge jury] 05/4/2007 16:18

WMPY now almost 10% below the implied merger price. In my view, they are now going to have to announce a big return of capital when they formally publish the merger documents.

[judge jury] 05/4/2007 11:38

TWOD up and WMPY down again today. It's getting interesting

[judge jury] 05/4/2007 09:28

Interesting to see that Merrill is sort of hedging its bets by saying that even if there is no bid from PSN, the merger is a good one (implying that Taylor Wimpey will be worth 550p). In my view, this will mean that PSN will have to put in a bid which is meaningfully higher than 550p. Otherwise the Board will be able to say: "ML think we should be trading at 550p as a merged group, supporting the logic of the merger. You are going to have to pay (e.g.) 600p to get our attention." This is also supported by the phrase "initial price of 525-550p" - i.e. this is only the start

STOCKWATCH Taylor Woodrow up; Merrill Lynch upgrades to 'buy' from 'neutral'
4 April 2007
AFX International Focus

LONDON (AFX) - Shares in Taylor Woodrow PLC were firmer in early morning trade after Merrill Lynch upgraded its rating to 'buy' from 'neutral' with a target price of 550 pence, following Taylor Woodrow's proposed merger with George Wimpey PLC, dealers said.

At 8.43 am, shares in Taylor Woodrow were up 12 pence at 505-1/4 while the FTSE 250 index was up 19.8 points at 11,905.

In a note published today, Merrill Lynch said that it had clearly missed some 20 pct of absolute outperformance since the proposed merger with Wimpey was announced on March 26.

The broker said it believes there is a strong probability that Persimmon PLC will counter-bid at an initial price of 525-550 pence.

It added that even if a Persimmon bid does not materialise then the terms of the Wimpey Taylor Woodrow combination are initially more favourable on a pro forma basis for Taylor Woodrow than for Wimpey.

[judge jury] 05/4/2007 08:37

Ex City ... probably like so many others here. You?

Takeover premium pretty big now ...

[markpun] 04/4/2007 12:47

Judge,

No apologies needed, may I ask what your background is?

[judge jury] 04/4/2007 11:20

Actually, I think I may have got my sums wrong (again!) sorry. TWOD had net assets at the year end of £2,105.5m and goodwill of £363.1m so net TANGIBLE assets of £1,742.4m. With 594.1m shares in issue at the year end, TWOD had net assets per share of 354p but net TANGIBLE assets per share of only 293p. This will probably have increased by some 20p by the mid year so lets say 313p.

I think most of the book multiples used in most past deals are based on net tangible assets rather than net assets and if you use the BDEV/WLB multiple of 1.8x NTA then you only get about 560p, so a bid of 575p would be a decent price.

Apologies again if I have confused people. Obviously not intentional.