Lend Lease in talks to buy Crosby Homes

PROPERTY group Lend Lease is in talks about a possible acquisition of Crosby Homes from The Berkeley Group for about £270m.

But in a statement to the Australian Stock Exchange, the company denied the deal was sealed. It is understood Lend Lease's investment committee has approved the purchase, and last week Building magazine said it would be announced on 24 June.

Lend Lease confirmed it was holding discussions with Crosby Homes and The Berkeley Group. However, it said: 'The Lend Lease board has taken no decision regarding a potential acquisition.'

The company also signalled it would continue to grow its retail business in the UK. Australian developers, including Lend Lease, shopping centre specialist Westfield and troubled Wembley developer Multiplex have been flocking to Britain as their domestic market matures.

The purchase of urban regeneration specialist Crosby Homes,would strengthen Lend Lease's hand in the Midlands and see a return to homebuilding by Bovis, Lend Lease's UK construction subsidiary.

Discussions are now believed to be centring on Lend Lease securing a controlling interest. Berkeley owns 49.9% of Crosby shares after Crosby chairman Geoff Hutchinson led a management buyout of 50.1% of the company in August 2003.

Crosby's directors are expected to move across to Lend Lease if the deal is completed. Lend Lease has been attracted to the sector by the government's ambitious plans to build more houses in the UK, which has spurred a goldrush by developers.

Last month property investor and developer Gerald Ronson's deal with housebuilder and regeneration specialist Crest Nicholson fell apart because the £480m bid by Ronson's company, Heron International, was too low.

Bovis - now known as Bovis Lend Lease - left the housing market eight years after former owner P&O floated Bovis Homes on the stock market. In 1999 P&O sold Bovis to Lend Lease.

Lend Lease, with a market cap of A$5.2bn (£2.5bn), has had success in winning work in the Midlands and northern England.

Two months ago it announced it had been chosen as preferred partner for the University of Sheffield to build an accommodation village for up to 4000 students.

Crosby, with offices in Edgbaston, Altrincham and Leeds, would strengthen that presence. Crosby's biggest project is Greenquarter in Manchester, where it is building 1500 apartments over five years. It employs about 250 staff and had an operating cashflow of £75m in the past year.