The increasingly dramatic world of housebuilding took a spectacular plot twist this week.
Barratt finally triumphed over Wimpey and HBOS in the battle to buy Wilson Bowden. Even after a year of frenzied corporate activity, the £2.2bn deal stands out. Not only is it the biggest ever in housing, but it may mark an acceleration in the consolidation process that, according to one well-informed commentator, will end with a triumvirate of volume housebuilder in a few years’ time.
Barratt has always been Britain’s best recognised housebuilder, thanks largely to Lawrie Barratt’s helicopter, and the sale of that house to Margaret Thatcher. The company’s business strategy has been conservative, too. Under David Pretty, its devotion to organic growth was so strong that it could have had a Soil Association seal of approval. Now, however, the distinctions between housebuilders, developers and just lately supermarkets are being eroded by the growth of mixed-use regeneration, and that strategy isn’t quite enough. Part of the attraction of Wilson Bowden is that it comes with a property development arm that can handle the commercial element of mixed-use. As for houses, the geographical fit is good, as is the mix of products. And it seems that Barratt could also learn a thing or two from Wilson Bowden’s design team.
Of course, it’s still a brave move. HBOS and Sir Tom Hunter walked away from the table, which might set some alarm bells ringing. And Barratt lacks Persimmon’s expertise in getting the most out of integration. It’s predicting cost savings of £45m from its deal whereas Persimmon squeezed £60m from its takeover of the (much smaller) Westbury.
But what about Anderson’s predicted implosion? Well, given that anything with land or property assets seems to be of intense interest to private equity raiders – and even Sainsbury’s and Tesco – traditional players know that they will have to choose between being the diner or the dinner. So, what are the odds on a Persimmon bid for Wimpey or Taylor Woodrow? Or a Redrow–Bovis merger? Like any good soap, or pantomime, the question is: what happens next?
It doesn’t add up
Tony Blair’s target of delivering 400 city academies by 2010 is in trouble. A procurement overhaul has doubled the number of schools to be built and halved the number of consultants deployed to help build them. As a result, the industry is warning that the target is likely to be missed. At the heart of the revamp is the merger of the overall programme manager and the construction project manager, which in principle makes sense. Understandably, the consultants are badgering the government about how the new system will work, but perhaps they should also ask the chancellor whether the academies programme has a future in the longer term.
Denise Chevin, editor