Redrow chairman makes £560m bid to regain control

Steve Morgan, who is owner of Wolverhampton Wanderers Football Club, returned to Redrow as executive chairman in a boardroom coup in 2009 and has been successful in reviving its fortunes since then.

His Bridgemere group, which holds a 40 per cent stake in Redrow, has now tabled a preliminary takeover approach valuing the Flintshire-based housebuilder at 152p a share, equivalent to around £562m.

Redrow has formed an independent committee of directors to consider the proposal, which is backed by another major shareholder in hedge fund Tosca.

While the offer is only slightly higher than Redrow’s closing price on Thursday night, Bridgemere said it represented a premium of 24 per cent on the average price seen over the last three months.

Bridgemere recently increased its shareholding in the housebuilder from 29 per cent as part of an £80m fundraising by Redrow to bolster its London division. Mr Morgan set up Redrow as a small civil engineering business in 1974 with the help of a £5,000 loan from his father.

The business floated on the stock market in 1994 before Mr Morgan stepped down as chairman in 2000.

He returned to the company three years ago after it posted its worst ever results and has boosted its performance by placing traditional family housing at the forefront of its offer.

Redrow shares were trading 3p above the proposed offer price yesterday, although Panmure Gordon analyst Mark Hughes said a bidding war looked unlikely.

He added: “We believe it unlikely that a rival bid at a larger premium than this will materialise and with the potential concert party owning over 54 per cent of the share capital, it is likely that this bid will go through.”

Mr Hughes said Mr Morgan’s historic involvement in Redrow meant it was unlikely the takeover would act as a catalyst for further bids in the sector.

Peel Hunt analyst Robin Hunt, who noted Morgan had lifted his stake to 40.4 per cent in a placing earlier this year, said it “was always possible he was going to push for the whole thing. So it is not entirely a surprise.

“I would guess you would make the assumption that we are still at a relatively low point in the house market cycle.”

Redrow reported an 80 per cent jump in first-half profit in February as its focus on higher-priced family houses paid off.

In June, the Government said it hoped to spark a 1930s-style house building boom by using its low borrowing costs to make finance cheaper, in an effort to drag the economy out of a second recession in four years without abandoning austerity plans.