Newly appointed Barratt Developments finance director Mark Pain has sparked a
frenzy of market activity in the sector after signalling his intention to drive
the building company into the FTSE100.
Analysts believe that the FTSE250 group will need to go on the acquisition
trail if it is to enter the top index,and Pain’s comments prompted a surge in
rivals George Wimpey and Taylor Woodrow,which by the end of last week had closed
33.5p and 18.3p up respectively.
Speaking to Accountancy Age, Pain,who will replace the retiring Colin
Dearlove,said it was too early to say if the group would pursue acquisitions,but
did reveal that he
planned to manage the group’s balance sheet more aggressively.
‘One thing that I am looking to do is introduce more balance sheet
management.The company is very prudent and capable,but I am hoping to leverage
the balance sheet more,’ Pain said.
He added:‘Barratt Developments has always been placed at around 112
to 115 on the stock exchange,so it is not a big step to the FTSE100’.
Collette Ord,an analyst at Numis, however,did sound a note of warning.
‘Acquisitions will need to be a straightforward fit.Barratt has the
firepower but will need to avoid messy integrations,’she said.
Barratt’s market cap is presently sitting at the £2.4bn level,and would need
to climb to around the £3bn mark to crack the FTSE100.
Barratt’s annual sales are currently sitting at £2.5bn.A merger with either
George Wimpey (£3bn sales) or Taylor Woodrow (£3.3bn sales),would almost
certainly catapult Barratt into the blue chip index.
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