Vistry Group shares climb as builder plans to merge divisions
- Vistry Group shares were the FTSE 250’s top performer on Monday morning
- The merger will see the number of regional business units reduced from 32 to 27
- For the first half of 2023, Vistry’s number of legal unit completions rose by 40%
Shares in Vistry Group soared on Monday after revealing plans to merge its housebuilding and partnerships divisions alongside a strong set of half-year results.
The Kent-based property developer aims to address the severe shortage of mixed-tenure, affordable homes in the UK through this merger.
As part of the restructuring, Vistry will reduce the number of regional business units from 32 to 27, and transition 30,200 plots in its housebuilding land bank to the Partnerships model.
Good result: Vistry said the merger of its housebuilding and partnerships divisions would help it focus on meeting the UK’s severe shortage of mixed-tenure, affordable homes
Vistry’s Countryside Partnerships brand and its three housebuilding brands, Bovis Homes, Linden Homes, and Countryside Homes, will remain unchanged.
The merger is expected to result in cost savings of about £25 million, in addition to the £60 million annual synergies from the previous acquisition of Countryside.
Following the announcement, Vistry Group shares rose by 14.75% on Monday morning, making them the top performer on the FTSE 250 Index.
Greg Fitzgerald, CEO of Vistry, stated that the merger positions them as the leader in partnerships housing and enables sustained growth and long-term returns for shareholders.
Vistry also upheld its guidance for £450 million in adjusted pre-tax profits, reporting strong first-half results with a 40% increase in legal unit completions and approximately a third rise in revenues to £1.58 billion.
However, profits declined by 8.4% to £174 million due to higher finance costs from rising debts and interest rates.
Despite a slowdown in market activity, Vistry’s partnerships and housebuilding divisions maintain a combined forward order book of £4.3 billion, with ongoing deals with local authorities and housing associations.
Mark Crouch, an analyst at investment platform eToro, commented that Vistry’s decision to focus on its partnerships business is sensible given the recent purchase of Countryside and the slowdown in the wider housebuilding market.
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