Deal, which would have created 拢4.3bn business, pulled yesterday 

Analysts have been giving their reaction to Bellway鈥檚 decision to call off its pursuit of Crest Nicholson.

In a brief update to the Stock Exchange yesterday, Bellway said 鈥渋t does not intend to make a firm offer for Crest Nicholson鈥� but did not give any further explanation.

Bellway had had two earlier offers for the firm rebuffed before making a 拢720m bid at the start of last month which Crest Nicholson said it was minded to recommend.

But the deal, which would have created a 拢4.3bn turnover business, is now off and in a note broker Investec said: 鈥淲hile we are somewhat surprised that Bellway does not intend to make a firm offer for Crest Nicholson, it was always subject to due diligence.

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Bellway gave no explanation in the Stock Exchange announcement saying it had abandoned its bid for Crest but analysts say it decided the risks were too high after completing due diligence

鈥淲hile the implied value of the most recent proposed offer looked reasonable for both parties to us, our belief it would happen did assume Bellway would be satisfied in its due diligence to confirm that the land bank and any risk around provisions were comfortable for it to deliver a good return from any potential deal.

鈥淣o reasons have been given for the announcement not to make a firm offer, but it is reasonable to assume that Bellway believed the risks to delivering a good return from the deal were too high.

鈥淔rom Bellway鈥檚 point of view, it did not need to do the deal given its good land bank and showing discipline around making any acquisition should reassure the market.鈥�

Meanwhile, Anthony Codling, managing director at RBC Capital Markets, said the move would hit Crest Nicholson鈥檚 recovery efforts which are now being masterminded by new boss, former Persimmon COO Martyn Clark who took over from Peter Truscott in June.

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He said: 鈥淲ithout a bid on the table we suspect that the path to recovery will be a long and winding road ahead for Crest Nicholson鈥檚 long suffering shareholders, but no doubt incoming CEO Martyn Clark will be glad he will get a chance to make his mark.

鈥淢eanwhile, Bellway鈥檚 engine is firing on all cylinders, so we question whether it needs to buy the misfiring Crest Nicholson.鈥�

In the six months to April, Crest Nicholson made a 拢31m pre-tax loss on revenue down 9% to 拢257.5m, compared with a 拢28m profit the previous year. Crest Nicholson is due to announce a trading update on 21 November.

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