Taylor hangs for sale sign on US branch

David Hellier
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HOUSEBUILDER Taylor Wimpey is putting its North American subsidiary Taylor Morrison up for auction, and has hired JPMorgan Chase to advise on the sale, the company confirmed last night.

The FTSE 250-listed company, which recently completed a £950m refinancing, has asked JPMorgan, one of its corporate brokers, to gauge market appetite for acquiring the US housebuilder as the property market begins to show signs of stability.

Taylor Wimpey said recently its subsidiary had an operating profit of £28.2m in the first half of 2010, with a focus on California, Arizona, Colorado, Texas and Florida. The firm said earlier this month it continued to buy land plots in the US and Canada, but did not expect to remain in the region long-term.

The asking price for Taylor Morrison was unclear yesterday, but the branch’s landbank in the US alone was worth $559.6m (£359.8m) in August.

“We have made no secret that in the next two or three years we intend to become a UK-focused company, and that we will be exiting the US,” chief executive Pete Redfern told City A.M. “But we are not in a position to announce anything soon.”

The UK parent said earlier this month that profit for the year is likely to be at the top end of estimates thanks to stable sales and cost savings, but that the market outlook remains uncertain.

Some US analysts were unsure that Taylor Morrison makes an attractive takeover target.
“My guess is we’re not going to see a lot of strong bids,” said Stifel Nicolaus analyst Mike Widner. “The builders all have plenty of cash on their balance sheets but the future is not crystal-clear right now in terms of volume of sales and how far home prices are going to fall.”