Taylor Wimpey completes North American sale

Housebuilder Taylor Wimpey (TW.) announced the sale of its North American business on Thursday for $955 million (£595 million) in a significant step towards its aim of focusing its business in the UK.

The FTSE 250-listed company said it has agreed to sell the entire issued sale capital of Taylor Woodrow Holdings in the US and Canada to TMM Holdings, a partnership controlled by a raft of investment funds.

Taylor Wimpey said it will also receive additional proceeds for cash balances in the North American business as at 31 December 2010 and net capital invested by the company in the North American business from 1 January to completion.

The base consideration of $955 million represents a premium of 3.4% to adjusted net assets of $923 million and Taylor Wimpey said the cash proceeds of the disposal will be applied to reduce its borrowings and pension deficit.

Pete Redfern, group chief executive, said: “Following a competitive process, we are pleased to have achieved a price that reflects an attractive valuation for this business. The sale will provide us with a strengthened balance sheet and increased financial capacity to invest in the UK.”

Rachel Waring, analyst at Panmure Gordon, upgraded the stock from a hold to a buy, saying in a note: “In our view, the disposal leaves the business in a much more assured position financially and operationally and more focused on the UK market.”

House prices rise

Separately, Nationwide reported a 0.5% increase in house prices during March, which represented a 0.1% increase for the year. The average house price in March was £164,751.

Robert Gardner, chief economist at Nationwide, said: “The three month on three month measure of house prices, a better measure of the underlying trend, showed a modest rise of 0.6% in March. The outlook remains uncertain, but all things considered, this is unlikely to mark the beginning of a strong upturn in prices.”

Howard Archer, chief UK and European economist at IHS Global Insight, agreed: “It is important to bear in mind that there are often fluctuations round a trend and house prices are notoriously volatile. Indeed we suspect that renewed modest falls in house prices are more probable than not over the coming months as tighter fiscal policy and likely gradually rising interest rates add to the pressure on the housing market.”

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