Bovis set to re-establish link with housing as Australian parent buys regeneration specialist from Berkeley Group

Contractor Bovis is set to renew its ties with the housing market after it emerged that Australian parent Lend Lease is in talks to buy Crosby Homes from the Berkeley Group for about 拢270m.

Lend Lease is undertaking due diligence but it is understood that the deal to buy the northern regeneration specialist has been approved by the company鈥檚 investment committee.

A source close to the deal said that Berkeley aimed to announce the exchange of contracts at its annual results meeting on 24 June.

It is the latest example of a developer attempting to buy a housebuilder to cash in on the government鈥檚 ambitious plans to build more houses in the UK.

Last month property investor and developer Gerald Ronson was forced to walk away from a deal to buy housebuilder and regeneration specialist Crest Nicholson. Crest refused to open up its books

to Ronson鈥檚 company, Heron International, because it said that its indicative offer of a maximum of 拢480m was too low.

The Crosby deal will see Bovis reunited with the housing sector, eight years after its former owner P&O floated Bovis Homes on the stock market. Two years later, in 1999, P&O sold Bovis to Lend Lease.

It is thought that the rationale behind the deal for Lend Lease is to strengthen its urban communities business, which is run by Keith Perry, in the North and the Midlands. Crosby has offices in Edgbaston in Birmingham, Altrincham in Cheshire and Leeds, West Yorkshire.

Crosby specialises in building urban apartments on brownfield land. Its biggest scheme at the moment is Greenquarter in Manchester, where more than 1500 apartments will be built over the next five years.

Berkeley aims to announce the exchange of contracts on 24 June

Source close to the deal

The Crosby management will report directly to Adrian Chamberlain, chief executive of Lend Lease鈥檚 Europe, Middle East and African operations.

Crosby employs about 250 staff and had an operating cash flow of 拢75m in year ending 30 April 2004. It sold more than 1000 units and had a land bank of more than 5000 plots, a rise of 6% on the year before.

Berkeley owns 49.9% of Crosby shares after Crosby chairman Geoff Hutchinson led a management buyout of 50.1% of the company in August 2003. Crosby鈥檚 directors are expected to move across to Lend Lease after the deal is completed.

Berkeley chairman Roger Lewis would not comment on the details of a deal, but did say: 鈥淲hen we restructured Crosby in 2003 we were effectively saying there was a 鈥榝or sale鈥� sign on the company and if an offer came in at an appropriate level we would consider it.鈥�

He added: 鈥淲e are having some discussions.鈥�

A spokesperson for Lend Lease said the company would not comment on market speculation.

Last week General Property Trust shareholders voted to cut the company鈥檚 ties with Lend Lease.