A fairer way to rank the UK’s 50 biggest homebuilders is to take the name on the siteboard and look at its unit volume and average selling price in its last reported full year. This gives a picture of each operation’s core market rather than aggregate plc totals. This also illustrates how the 50 biggest homebuilders are now shared between 42 corporate owners - proof of the much discussed consolidation.
In some top 10 plc boardrooms, consolidation means a portfolio of companies for different markets. The quick emergence of Harwood Homes, a market-entry-level business set up from scratch by Redrow shows such consolidation can even be organic. Other groups such as Beazer bought “boutique” operations, in this case Charles Church Homes. Beazer’s outlined strategy for growing Charles Church means the top-of-the-market housebuilder will be joining Harwood in the top 50 next year.
This pattern suggests a future where major quoted firms own a string of individually focussed businesses, such as Berkeley Group with its namesake Berkeley Homes, alongside St George, Crosby Homes, Beaufort Homes and more. Next year the four biggest Berkeley businesses might all appear in the top 50, yet with few among their buying public aware of any links.
But other leading homebuilders argue consolidation means swallowing up firms and infusing a corporate consciousness in preparation for establishing brand values. Westbury, for example, purchased first Clarke Homes in 1996 and then Maunders in April 1998. Both are being assimilated to a point where the original name will leave no trace. More of the same should follow, according to group chief executive Martin Donohue, speaking after the Maunders purchase had brought potential for instant volume growth of at least 25%. “Like retailers, we’re consolidating - and if you think back 10 years, nobody then imagined there’d be just four or five major chains today. There will be significantly fewer players in this industry in just a few years.”
Homebuilders like Westbury increasingly relate to retailing, making references to how “critical mass” and “market share” allows “more business through the same fixed cost”. Such groups are buying others to strengthen a presence in the markets where they are thinnest on the ground - “the strategic fit”, as the City calls it. They assess perfect market share for a region and then consider acquisitions to get there.
So who’s next to be swallowed up? Wimpey group chairman Joe Dwyer talked in the autumn of low stockmarket values much raising the chance of takeovers. Conversely, stockmarket weakness was blamed in December for the collapse of the reverse takeover of Lovell by Mansell. That the market had picked up when Bovis’s interest in Crest or Linden’s in Swan Hill was reported might be because these are old secrets freshly leaking. Less expected has been a flight from public ownership. CALA’s board has begun a buy-back, while Wainhomes’ delisting is well advanced.
But the biggest corporate news is the purchase of Fairclough Homes by Centex Corporation of Dallas, concluded 16 April. Centex paid £108m to Amec for a top 20 operation with a recognisable name which it says it is keeping. Majors such as Wimpey, Taylor Woodrow and Laing have long held operations in North America. Will Centex really prove to be the only US business to take an active interest in what many in the USA either fear or want a slice of - a powerful European single economy?
Source
Building Homes
