Listed developer agrees to £500m cash offer by charitable foundation

Urban & Civic is set to be bought by charitable foundation the Wellcome Trust after the board of the developer announced it had accepted a £506m bid from the charity.

The listed developer of large scale new communities said in a joint statement with the Wellcome Trust that it was unanimously recommending shareholders back the offer of 345p for each share in the business – a premium of two thirds to yesterday’s stock exchange closing price.

Manydown CGI Urban & Civic lower res

Urban & Civic’s share price immediately rocketed by 65% on the news, with the developer claiming it had already received undertakings to support the deal from shareholders representing 6.5% of the value of the company.

Peter Pereira Gray, managing partner and chief executive officer of the Investment Division of Wellcome, said: “The offer by Wellcome for Urban & Civic represents a compelling value proposition for Urban & Civic’s shareholders at an attractive and certain value in cash today, reflecting the high quality of the business, its people and its future prospects.

Alan Dickinson, chairman of Urban & Civic, said the offer secured returns for “loyal” shareholders, while maintaining the focus of the business on high-quality development. He said: “Comprehensive alignment with the objectives of Homes England and respective local authorities will be maintained and reinforced.

“The growing residential communities that are being created by Urban&Civic, with the involvement of valued and reputed partners, can all be confident in a continued determination to do things right.”

The acquisition appears to have been borne out of the collaboration between the Wellcome Trust and Urban & Civic on the £1.2bn garden community development of Manydown in Hampshire (pictured, abovee left), which received outline planning permission in July this year. The organisations announced the formation of a joint venture between them and the local authorities in the area shortly afterwards.

Waterbeach, Urban & Civic

Urban & Civic was set up by former Chelsfield boss Nigel Hugill alongside Robin Butler in 2009 to become a “master developer” of large strategic housing sites, such as Waterbeach Barracks in Cambridgeshire (pictured, right). It now has ten strategic housing sites under ownership, of which it is building out six already via partnerships with other developers and housebuilders, with 33,500 consented homes.

Explaining the deal, the Wellcome Trust said Urban & Civic was “one of the UK’s leading large-scale urban development businesses, with a successful track record” and said it did not intend to alter its strategy and will retain its current management.

Its offer statement said: “Wellcome intends that the Urban&Civic Group will continue to pursue its existing pipeline of development opportunities and continue to invest in new opportunities as they arise.”

Prior to the announcement, Urban & Civic had a stock market valuation of £306m, though it said it actual Net Asset Value had been rated at 343p per share, just under the offer price of £506m.

The Wellcome Trust controls a £26.8bn investment portfolio designed to maximise income for the charitable purposes of the foundation, which is focused on improving public health.

Wellcome Trust will pay for the purchase in cash, rather than shares.

The purchase is being made via a court-sanctioned “scheme of arrangement”, which will require 75% of Urban & Civic shareholders to vote in favour of the deal.

More to follow…