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10 March 2010

Barratt shares up on takeover speculation

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by Kay Mitchell

Barratt shares up on takeover speculation

Shares in Barratt Developments rose 6% today on the back of rumours that fellow housebuilder Persimmon is considering a takeover bid for the group, according to traders.

City traders believe Persimmon could make a bid at 170p a share. However, both housebuilders declined to comment on the speculation.

The speculation mounted after traders said over 19.6 million Barratt shares had changed hands by late afternoon today – compared with a typical 90-day daily average of 8.9 million shares.

Persimmon, which is the UK’s largest housebuilder by market value, was rumoured to be interested in buying smaller rival Bovis Homes prior to its full-year results last week.

In the meantime, Persimmon, recently reported a pre-tax profit of £77.8 million compared with a £780 million loss in 2008.

The housebuilder said it “remains cautious in its investment decisions” and will not make any forecasts for house prices this year given the uncertainty over the general election.

Meanwhile, Barratt recently made a pre-tax loss of £178.4 million, against a loss of £594.5 million a year earlier.

Many housebuilders experienced a dismal 2008 as a result of falling house prices and the tightening of lending criteria.

However, it appears the industry is picking up but the priority of many housebuilders is to trim debt and improve margins.

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