Insurance giant Legal & General has agreed to a £605m takeover of housebuilder Cala, it confirmed this morning.
Legal & General Capital (LGEN.L) has taken full control of British housebuilder Cala Homes in a deal that values the company at 605 million pounds ($840.35 million), the FTSE-100 insurer said on Tuesday.
The deal will add Cala to a portfolio of L&G-owned businesses which are trying to address some of Britain's biggest economic quandaries.
Kerrigan Procter, Chief Executive Officer of Legal & General Capital, said: "Legal & General is delighted to assume full ownership of CALA Homes, a growing business which we know and understand well".
The insurer, which was a minority shareholder, has bought the remaining 52.1 per cent of the company for £315m plus transaction costs and financial adjustments, and the transaction completes immediately.
If CALA Homes had been 100% owned by Legal & General during 2017 on a post transaction basis, the operating profit before tax would have been £91.5m.
"Legal & General has valued the contributions of Patron over the past years and is pleased to have successfully grown the business together".
Alan Brown, chief executive of CALA Homes, added that the investment by Legal & General marked the start of "another exciting new chapter" for CALA Homes, calling it a "fantastic endorsement" of the firm's growth potential from a blue-chip investor which shared CALA's long-term vision.
He said: "Over the past five years we have become one of the UK's fastest-growing housebuilders and this is testament to the strength and ambition of our team, the quality of our homes and our approach to customer service".
He noted that Cala had "a strong management team with proven experience of managing a housebuilding business across business cycles, and has delivered great returns for shareholders since its acquisition in 2013".
Last week, Theresa May, the Prime Minister, ordered housing developers to stop hoarding land and get on with building new homes amid a continuing squeeze on new housing supply. L&G reported pre-tax profits of of £42.5m for its 47.9% stake in Cala Homes in 2017. "Patron remains committed to the United Kingdom residential sector with our extensive investment activities in this area".