Barratt shares rise amid acquisition rumours — March 17, 2010

The recent improvement in profits experienced by home builder Persimmon Homes has caused a number of rumours to surface in the housing industry, the effects of which are being felt in the markets.

Persimmon Homes was the first home builder to announce a significant rise in profits this year suggesting that it’s recovery after the financial downturn is the most complete of home builders in the United Kingdom. As a result, rumours are spreading through the housing industry that the business will look for possible takeover targets from among its less fortunate rivals.

On the housing market, Barratt Homes, one of Persimmon’s fiercest rivals, has experienced an inflation in share price because of the perceived interest in the firm from Persimmon.

Market analysts do not share in the optimism expressed by those hoping for a takeover. Barratt would have had to have announced any approach from Persimmon – something it has not done. Moreover, analysts believe large scale acquisitions represent dangerous moves amid such uncertain economic conditions.

Barratt has also experienced an improvement in trading and has forecasted further reductions in debt for the coming months, suggesting the firm is concentrating on its own recovery, rather than considering its options in terms of a sale.