Redrow Chairman makes takeover approach

Redrow, the FTSE 250 house builder which has seen shares rise by nearly a fifth over the last month, has confirmed that three investment firms are interested in a takeover, one of which is controlled by the company's Chairman and well-known businessman, Steve Morgan.

Bridgemere Securities, Toscafund Asset Management and Penta Capital have made an initial approach to Redrow and are said to be considering the possibility of an all-cash offer of 152p per share, a premium of 23.8% to the 90-trading day volume-weighted average Redrow share price of 122.7p.

The "possible" offer price of 152p per share, which values the company at around £560m, compares with the December 2011 reported net asset value of 150p per share.

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In a statement on Friday morning, the company said that the price is a "strong value proposition when considered in the context of Redrow's share price performance in recent years, which has seen Redrow shares trade at a significant discount to reported net asset value over an extended period."

Over the past year, the share price has risen steadily from the near-100p level to 151p by yesterday's close, an increase of a half. The stock has increased by 19.84% over the past 30 days.

Bridgemere, a 40.4% shareholder in Redrow, is controlled by Morgan, while Toscafund holds a 13.8% stake.

"Bridgemere and Tosca / Penta are not yet considered joint offerors for the purposes of the Code [the City Code on Takeovers and Mergers] but are in discussions with the Takeover Panel and Redrow in respect of this matter. There is no certainty that Bridgemere and Tosca / Penta will be considered joint offerors."

As usual in these situations, Redrow explained that the approach is still at a preliminary stage and there could be no certainty that an offer will be made.

The company said: "The board will now establish a committee of independent directors to consider the approach.Shareholders are urged to take no action at this time."