Bovis Homes and Galliford Try in merger talks

British house building rivals Bovis Homes and Galliford Try are discussing the terms of a possible merger.

The companies are continuing discussions despite Bovis announcing on 12 March that it had rejected an initial all-share offer from Galliford.

Bovis also turned down a competing share-and-cash bid from Redrow.

The FTSE 250 company said the preliminary offers did not reflect "the underlying value of the Bovis business".

"Redrow subsequently indicated that it was not willing to improve the terms of its proposal and discussions were terminated. Discussions with Galliford Try are ongoing," Bovis said in a statement.

The company's chief executive, David Ritchie, quit in January, two weeks after it issued a surprise profit warning and announced that some completions of its houses would be delayed.

It also set aside £7m ($8.5m) to address customer complaints about the quality of its already completed homes.

Galliford's initial all-share offer valued Bovis at 886p-a-share, while Redrow valued the builder at 814p-a-share. Bovis's share price closed at 828p on 10 March.

Bovis confirmed that it ended merger discussions with Redrow after the latter said that it was not willing to improve upon its preliminary offer.

"The board also concluded that the Redrow proposal was not in the interests of Bovis shareholders as the cash element of the offer would require shareholders to crystallise value at the current Bovis valuation," Bovis said.

It added: "In the meantime, the board is making good progress with plans to recover and improve group profitability and enhance return on capital employed. The search for a new chief executive is also progressing well.

"The board of Bovis remains committed to maximising returns to shareholders and will continue to consider all strategic alternatives.

"There can be no certainty that any firm offer will be made or as to the terms on which any firm offer might be made."