Legal & General has acquired the 52.1% of CALA Homes which it did not previously own. The takeover signals Legal & General’s confidence in CALA Homes.
The business has performed strongly since Legal and General bought its initial stake, with revenues growing threefold from £241m in 2013 to £748m in 2017, and profits growing at a CAGR of 12% over the last three years.
If CALA Homes had been 100% owned by Legal & General during 2017 on a post transaction basis, the operating profit before tax would have been £91.5m. Legal & General reported operating profit before tax for its 47.88% stake in CALA Homes in 2017 of £42.5m.
Kerrigan Procter, Chief Executive Officer of Legal & General Capital, said, “Legal & General is delighted to assume full ownership of CALA Homes, a growing business which we know and understand well.
“It has a strong management team with proven experience of managing a housebuilding business across business cycles, and has delivered great returns for shareholders since its acquisition in 2013, having tripled in revenue during this time.”
The total valuation of 100% of the equity in CALA Homes was £605m. The acquisition cost of the 52.1% share capital Legal & General did not own was £315m plus additional transaction costs and financial adjustments to reflect the contribution of management and Patron during the period of our joint ownership.
Keith Breslauer, Managing Director of Patron Capital, said, “Over the last five years, CALA Homes has expanded significantly, growing twofold the annual volume of homes sold and fourfold the operating profits, delivering on the business plan set out at the time of Patron and Legal & General’s acquisition.
“Patron wishes to thank the CALA management for delivering on the plan and Legal & General for its support of the investment; we are confident that the business will continue to grow and thrive under Legal & General’s ownership.”
Mark Farmer, CEO of Cast, commented, “Legal & General’s move to takeover over Cala in its entirety is encouraging for the entire sector, as an injection of large scale fresh capital combined with L&G’s much broader strategic ambitions to tackle the UK housing crisis on a number of fronts can only be a good thing.
“At a time of increasing uncertainty for the construction sector, acquisitions like this provide the strong and decisive leadership needed to address the industry’s many shortfalls.
“Personally, I am certain that this move will be a positive for an under pressure homebuilding sector being increasingly scrutinised for poor corporate governance, land banking, and its reliance on tax payer funded Help to Buy.”