builder Crest Nicholson

Hugh Osmond built up Pizza Express, created Punch Taverns and ran Pearl Assurance
Ben Marlow and Iain Dey 1 Comment
Recommend? (1) HUGH OSMOND, the tycoon behind some of Britain’s best-known companies, has made a takeover offer for Crest Nicholson, the housebuilder, as part of an audacious scheme to consolidate the beleaguered construction sector.

Horizon, Osmond’s acquisition vehicle, tabled a bid for Crest last week that values it between £300m and £350m.

Osmond, who built up Pizza Express, created Punch Taverns and ran Pearl Assurance, has a hitlist of companies that have been crippled by debts during the recession.

The City had been on tenterhooks waiting to see what Osmond’s first target would be, with rumours regularly sweeping the market.

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Osmond made his move last week, putting the takeover plan to a meeting of Crest’s 40 banks on Wednesday. The housebuilder's main lender is Lloyds Banking Group.

Lloyds took control of Crest last year through a debt-for-equity swap at the peak of the credit crisis. It was one of a number of housebuilders that fell into the bank’s hands as house prices started to collapse.

It is understood that the deal will go ahead only if Osmond receives a commitment from the banks that they will consider selling other property firms and land portfolios that have come under their control.

The project is one of four takeovers being considered by the Horizon team, according to market sources. It is also believed to be the smallest of the firm’s potential deals. Horizon raised close to £420m of equity through a stock-market listing this year and has been targeting companies with an enterprise value — equity plus debt — of up to £3 billion.

Other potential deals are spread across a variety of sectors. When Osmond raised the new fund, he told investors he was not interested in property-based investments but has since changed his mind.

The collapse in property prices has left housebuilders across the country in breach of their lendng agreements with banks, forcing many to sell off assets at distressed prices.

None of the established players in housebuilding has yet to emerge as a potential consolidator that could pull together the sector.

Crest Nicholson was part of a disastrous foray into housebuilding by HBOS, the bank that collapsed into Lloyds’ arms in September 2008.

Lloyds led a group of Crest’s lenders that wrote off £630m of debt in return for a 90% stake in the company, which builds about 2,000 homes a year and is concentrated in southeast England and the Midlands.

It had been owned through a 50:50 joint venture between HBOS and Sir Tom Hunter, the Scottish entrepreneur whose investment arm, West Coast Capital, was one of the biggest casualties of the recession.

They bought the firm for £1.2 billion in May 2007 — close to the peak of the housing market — in a deal that was paid for almost entirely through debt financing.