Shares in Barratts take a dive
Dec 5 2007 by Andrew Mernin, The Journal
SHARES in the UK’s second biggest housebuilder Barratt Developments plunged yesterday as speculation that the firm was set to change hands cooled.
On Monday, the Newcastle group’s embattled shares received a welcome 3.75p lift to 469p amid rumours it was set to be the subject of a takeover bid or management buyout.
Yesterday, however, shares fell back by 27.75p to 441.25p as unconfirmed rumours of a 600p-a-share buy-out cooled down. The company said it was unable to comment on market speculation.
Vinay Bedi, of stockbrokers Wise-Speke, said: “You did see a lift on Monday, but those shares have suffered terribly over the last six months as the general housing sector has been hit by what were initially rising interest rates and now concerns that the property market is slowing down.
“It’s not surprising people think there may be an element of long-term value there and you will always get rumours in a volatile market.”
Like its competitors in the construction and property sectors, Barratt’s shares have suffered at the hands of tough market conditions. In the last six months, the share price has plummeted from above the 1000p mark to a low of 436.50p.
Similarly, builder Persimmon has seen its share price fall from above 1,200p to below 800p since June, while Bellway has seen its stock fall from over 1,300p to below 1,000p in the same period.
Last month, Barratt said the impact of five interest rate hikes in 15 months and the summer’s credit squeeze on mortgages had seen lower sales compared to last year in the 19 weeks since July 1.
On a positive note, Barratt has a strong forward order book, which stands at around £1.8bn, and 8,750 homes are expected to be sold in the first half of the year. The integration of Wilson Bowden is also on track and synergy savings are expected to be around £30m this year and £60m in 2008.
