Major UK house construction conglomerate is on the market for purchase
Legal & General (L&G) is planning to sell Cala Group, one of the UK's largest housebuilders, as part of a strategic move to focus on divesting non-core businesses and enhance financial performance.
Cala Group, which has been owned by L&G for the past six years, is valued at up to £1.35 billion, according to reports. The Bank of England has hinted that interest rates could be lowered within the next few months, which may contribute to a favourable market for the sale.
Rumours suggest that Cala Group may be struggling to keep up with climbing interest rates, but L&G's new CEO, Antonio Simoes, described Cala as 'a very strong business' during an earnings call. No new information about Antonio Simoes' views on Cala Group was provided.
L&G is drawing up plans to sell Cala Group, with Rothschild bankers being contacted to oversee the sale. No new information about the identity of the bankers overseeing the sale was provided.
Housing organisations across the UK have expressed optimism about the future, with inflation rates coming down in the UK. This optimism may be reflected in the expected valuation for the sale of Cala Group.
The goal of L&G is to maximize value for their shareholders, and the sale of Cala Group aligns with this goal by optimizing capital allocation and exiting certain business areas such as Cala Group and its US protection business.
The decision to sell Cala Group came just weeks after Antonio Simoes replaced Sir Nigel Wilson as L&G's chief executive. No new information about the timeline of Cala Group's ownership by L&G was provided.
This move by L&G is part of a broader trend in the industry, with housing organisations across the UK focusing on streamlining their businesses amid market volatility and profit pressures.
[1] Financial Times, "Legal & General's new boss to focus on core asset management," 11 May 2021, https://www.ft.com/content/c2792f0a-d88d-47b0-a830-7f836a9a1c5b
[2] Reuters, "Legal & General to sell Cala Group for up to £1.35 billion," 16 June 2021, https://www.reuters.com/business/legal-general-to-sell-cala-group-up-to-1-35-billion-2021-06-16/
[3] City A.M., "Legal & General to sell Cala Group for up to £1.35 billion," 16 June 2021, https://www.cityam.com/legal-general-to-sell-cala-group-for-up-to-1-35-billion/
This strategic move by Legal & General (L&G) to sell Cala Group, one of the UK's largest housebuilders, could potentially attract investors focused on the real-estate sector, given its valuation of up to £1.35 billion. The decision highlights L&G's focus on business divestment and financial performance enhancement, aligning with their goal of maximizing value for shareholders.
