McAlpine confirms buyout talks with rival Wimpey

UK house builders Alfred McAlpine have confirmed that talks about the sale of the company’s house building business have been held with fierce rivals George Wimpey.

With discussions said to be at an “advanced stage” though there is no certainty that these talks will lead to a sale, speculation is now rife that consolidation in the sector, which is dominated by medium-sized and small firms, may lead to a spate of takeovers in a major shakeup of the house building sector in the UK construction industry.

Wimpey said that if a deal is struck it would be a cash sale, believed to involve a bid of around £400 million by Wimpey. McAlpine, who last year had pre-tax profits of 60.2 million, saw shares rise by 9.5 pence to 388p at the news, but Wimpey’s shares which dipped at one point to 182.5 pence were rallying back to move beyond 190 pence.

Industry analysts point out that with the sector is suffering from a lack of new house building, house prices are soaring as demand exceeds supply. Part of the problem is that house building firms have resisted pressure to adopt modern assembly line techniques that are routinely used in other parts of the developed world.

However, while Wimpey who have been concentrating on volume production, McAlpine have continued to favour more exclusive upmarket developments built on higher priced land.

A further announcement on the progress of the talks is expected in due course. (SP)