THE housebuilding sector was in demand among investors yesterday after a takeover approach for Westbury led to hopes of further consolidation.
Shares in Westbury rocketed as investors seized the first opportunity to trade its shares since the Cheltenham company revealed on Friday that it was a takeover target.
That approach came from Persimmon, which is based in York, and investors saw the merits of a marriage that would create the UK's largest housebuilder by sales volume, overtaking Barratt Developments, of Newcastle.
Persimmon shares made gains amid reports that it was willing to pay about 560p a share, valuing Westbury at £638m. Persimmon has a track record of making large acquisitions, having successfully integrated Beazer following a £560m takeover in 2001. It is valued at more than £2.8bn and is on the brink of joining the FTSE 100 Index.
But analysts questioned whether rivals would allow Persimmon a clear run at Westbury, while speculation about other potential deals pushed shares of housebuilders higher.
Taylor Woodrow, Bovis Homes and Redrow were up more than three per cent to closely follow the likes of Barratt Developments, Bellway and Wilson Bowden, which lifted four per cent.
Seymour Pierce analyst Tessa Guy said: "We wouldn't rule out some of the smaller players in a tie-up such as Redrow and Bellway or Bovis and the larger players that may look vulnerable are Wilson Bowden and Taylor Woodrow."
The need to acquire land more cheaply given difficult trading conditions could spur Barratt or George Wimpey to launch counter raids for Westbury, she added.
The vulnerability of Westbury to a takeover has grown since it posted a 26 per cent drop in half-year profits towards the end of last month.
Westbury denied that its profits of £45.5m for the six months to August 31 were a let-down, calling them "satisfactory" in a property market that was weaker than expected - especially during the summer.
In common with many of its rivals, Westbury has been spending more on marketing and offering bigger incentives at a time when labour and raw material costs have been rising. Its Westbury Homes division sold 1,934 houses during the six months - down from 2,087 in the same period last year. Revenues fell to £415.3m from £427m last time.
Persimmon generated revenues of £1.09bn as its profits hit a record £235m during the first six months of its financial year.
Comments: Our rules
We want our comments to be a lively and valuable part of our community - a place where readers can debate and engage with the most important local issues. The ability to comment on our stories is a privilege, not a right, however, and that privilege may be withdrawn if it is abused or misused.
Please report any comments that break our rules.
Read the rules hereComments are closed on this article