Urban&Civic acquisition of Catesby Property Group plc
Urban&Civic is pleased to announce the acquisition of Catesby Property Group plc (“Catesby”), a well-established, planning led, strategic land company set up in 1996 by Eric Grove.
Catesby is based in Warwickshire and has specialised in residential land promotion and commercial property development since inception. The company has interests in land holdings comprising 5,300 units (predominantly through promotion agreements and partial equity ownerships) across 21 sites in areas of high housebuilder demand in the Home Counties and southern parts of the Midlands.
Significantly in the context of Urban&Civic’ s enlarging housing pipeline in good local economies with direct national rail connections, approximately 2,600 units represent a consented urban extension of Newark-on-Trent, Nottinghamshire, where Catesby has an approximate 82% interest. The intention is that Newark will be developed in accordance with the strategic business model of selling serviced plot parcels, having invested in infrastructure and high quality public realm. Demand in the area is recovering rapidly and the cost of acquisition equates to a highly competitive £8,300 per unserviced plot with good prospects for Government Growth Fund support.
The remaining interests are of non-strategic scale and are likely to be sold on a bilateral basis without substantial further capital investment. Much of the historic success of Catesby has been derived from anticipating and matching housebuilder requirements. Recent sales have achieved corresponding premiums over book carrying value.
Following an extensive due diligence process the aggregate purchase consideration has been agreed at £34.0 million for the entire issued share capital of Catesby, payable as to £22.0 million in cash, financed through existing resources and £12.0 million to be satisfied through the issue of 4,248,553 new, fully paid up, ordinary shares in Urban&Civic (“Consideration shares”) and 177,697 awards under the Urban&Civic Performance Share Plan, all at 271.86 pence per share.
The Company expects the acquisition to be asset and materially earnings accretive in the current year. The gross property assets which are the subject of the transaction total £34.5 million as at 31 December 2014 including fair value adjustments. Other net assets and liabilities amount to £4.6 million. The last reported post-tax profits of Catesby for the 18 month period to 31 December 2014 were £10.8 million. The Company will be required to fair value all of Catesby’s assets and liabilities for the purposes of the acquisition accounting and expects to recognise a credit to the income statement in the half year results as at 31 March 2015 of approximately £5 million, reflecting negative goodwill arising on the transaction.
Eric Grove has agreed to act as a consultant to Urban&Civic for a period of 24 months and all other staff, including Paul Brocklehurst, the longstanding Catesby Chief Executive, will remain with the group.
The Consideration shares and awards represent approximately 3% of the existing issued share capital and various restrictions have been agreed as regards their disposal. Application will be made to the FCA for the Consideration shares to be admitted to the standard listing segment of the Official List and to the London Stock Exchange for the Consideration shares to be admitted to trading on the London Stock Exchange’s main market for listed securities. The Consideration shares are expected to be admitted no later than 30 days after their allotment.
Nigel Hugill, Executive Chairman, described his pleasure at the continuing progress being made by Urban&Civic:
“This is a very happy outcome for both companies. Catesby has achieved consistent, planning led success over almost 20 years and incorporation within Urban&Civic will enable the key Newark project to be developed in accordance with our business model that invests early in community infrastructure and public realm. Eric Grove brings a wealth of knowledge and experience and is a most welcome addition to our shareholder base.”
Eric Grove, founder of Catesby Property Group plc, expressed similar satisfaction:
“I am genuinely delighted that Catesby is to become part of the undoubtedly impressive Urban&Civic organisation. This was not a decision to be taken lightly. We spent some six months in discussion because we were all determined to get things right. I believe we have.”