Published on : Sun, 13 Nov 2005 19:12GMT
by : Andy Clarke

LONDON - Persimmon Plc confirmed that it had made an approach to take over smaller rival Westbury in a deal that could overtake Barratt's and create Britain’s biggest housebuilder by the volume of sales.

"We've made an approach to Westbury," a Persimmon spokesman confirmed, but as usual refused to give any further details. It is however speculated that Persimmon is offering 550 pence to 560 pence a share to Westbury. This values the company close to £640 million. However both Persimmon and Westbury refused to commit themselves on this figure.

Analysts say that the deal to buy out Westbury makes sense for Persimmon, "It would certainly make sense. I think you have to factor in the recent slowdown in the market to the premium that should be paid," said Mark Hughes, an industry analyst at brokers Numis Securities. The deal if it goes through gives a 9 percent share of the market to Persimmon, making it a huge player in the reviving housing market. The market was in an abyss all through the year, but the August rate cut by the Bank of England has revived it.

The news of an offer and the possibility of its acceptance drove Westbury shares up 29 pence to 494 pence at close on Friday. But the firm issued a statement saying, "There can be no certainty that any offer will ultimately be made."

Last year, Westbury had registered a profit of £120 million, but this year has not been so good for the company. Westbury took a 26 percent hit in first-half pre-tax profits to £45.5 million and issued a warning that the market conditions were tough and hence it was not confident of reporting decent full-year profits as well. It is also speculated that other firms could enter the bidding war for Westbury, but these reports are mere speculation as of now.