Wimpey may float US arm

By JAMES ROSSITER
Updated:

 

GEORGE Wimpey, one of Britain's biggest housebuilders, is eyeing a £2bn flotation of its burgeoning US business.

The plan is part of a strategy to improve the company's valuation amid directors' concerns that London investors have yet to grasp the growth potential of the American operations.

Chief executive Peter Johnson wants to double the number of homes the firm builds in the US market to 10,000 a year by 2010 without the need to buy another builder. It has already doubled output from its US Morrison Homes division in the past five years.

'We have grown the business and earnings in the last five years and can double that value in the next five years,' he said. 'If that value is not reflected in our share price, we could crystallise it through a flotation. I am determined that, One way or another; we will create value for our shareholders.'

In its first half to 3 July, operating profits from the Morrison division leaped 64% to £54.5m, accounting for 35% of group profits, up from 25% of the total a year ago. The value of Wimpey's landholdings and completed homes in the US is about £454m.

A trade sale today might net Wimpey $1bn as US buyers tend to pay a small premium over the book value of assets. But a flotation today would give the Morrison division a market value of about $1.6bn. Add in debt and the value would rise to $1.8bn.

A senior source predicts that Wimpey may want to build up its asset base further to $2bn before attempting a listing, bringing it closer to a flotation value of between $3.5bn and $4bn.

Morrison will shortly open for business in Nevada to add to its operations in northern California, central Florida, Phoenix in Arizona, Denver in Colorado, and in Texas where its homes sold on average for $302,000 during the first half, up 9% on the year.

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