Housebuilders: a buyers’ guide

Housebuilders are the hot stocks of the moment. In addition to the official takeovers and bid offers, such as the fierce battle for McCarthy & Stone last month, almost every week the sector throws up a rumour about one of the major players.

McCarthy & Stone was sold to private equity bidders for £1.1bn and other private capital firms are said to be sniffing around the sector. Clive Bawden of mid-market adviser Catalyst Corporate Finance says: “We have noticed a considerable increase in private companies seeking our advice in recent months. This has been further fuelled by the large amount of private equity interest in the sector and the re-rating of the quoted sector stocks, which have changed the financial dynamics of the sector.”

There is also much interest from within the sector. Persimmon’s £643m acquisition of Westbury catapulted it into the FTSE 100, making it the UK’s biggest housebuilder. More recently, and on a smaller scale, McInerney Homes bought Bowey Homes for £23.6m and Linden Homes has also put itself on the market.

On the other hand, Barratt has spent the past 12 years saying that it is only interested in organic growth. But having lost its number-one spot thanks to the Persimmon/Westbury tie-up, incoming chief executive Mark Clare might see a big acquisition as his chance to put his stamp on the business.

To keep track of the mergers and acquisitions activity, Building has identified the housebuilders that have attracted the most attention and detailed whether they are up for sale or not and who might put in an offer. The table also identifies the issues any potential buyer would want to assess before getting out their cash.