Buy, buy, buy!
Shares across the sector rallied last week as speculation about possible mergers and acquisitions gathered pace. Talk of consolidation is not new to the industry but recent acquisitions among the giant building materials companies such as Wolseley and Travis Perkins, as well as hints and nudges from the major housebuilders that deals were there to be done, sent shares soaring.
Persimmon, the UK’s largest housebuilder with a market capitalisation of £2.2bn, has been at the centre of rumours over recent months, but some analysts believe that a takeover of a medium-sized company, such as Westbury, is now
a real prospect. Shares in the two companies rose 8% to 749.5p and 503p respectively last week.
Such a deal would catapult Persimmon to the dizzy heights of the FTSE-100 where, it is thought, better ratings can be achieved.
A hike in the share prices of all these housebuilders last week – Barratt (+8%), Redrow (+8%), Taylor Woodrow (+6%) and Wimpey (+6%), suggested that all the signs were there for further consolidation.
Despite bad news from Mowlem (see above) the major contractors were not hit badly by a general nervousness about the prospects for construction. Gleeson continued on a high, up 4% to 263.5p and the biggest contractor, Balfour Beatty, dropped by less than 1% to 340p.
One of the worst performers of the week was Havelock Europa.
It dropped 8% to 120.5p after a negative trading update two weeks ago said a number of Jarvis PFI projects had been delayed.
Shares in Jarvis itself rose 8% after the market welcomed news of its reprieve from the banks, but with shares trading at just 30p, the uplift can be misleading. The company, as well as its share price, is still a mere shadow of its former self.
Overall, it was a rosy outlook for construction last week, with the sector up 4% to 3546 overall. It outperformed the All-Share, which rose 2% to 2486.
Angela Monaghan is business editor