Three months after announcing an option to purchase Western Australia’s eighth-biggest homebuilder, ASX-listed Simonds Group said today it would not proceed with the acquisition of Gemmill Homes.
Simonds’ call option, to purchase Gemmill for $6 million, could have been exercised at any time up to July 31.
The Melbourne-based company said today that, after three months of due diligence, its board had decided it would not acquire Gemmill.
Business News has been told that Simonds completed due diligence in mid-2015 and has not returned to Perth since announcing the planned acquisition in November.
Simonds’ rethink follows several other notable changes in the business.
Long-serving managing director Paul McMahon left the business in January and is due to be replaced in April by Matthew Chun, who is currently a non-executive director.
Simonds’ share price and market value have also taken a tumble, from about 90 cents when the deal was announced to 35.5 cents today.
The Melbourne-based company today announced a net loss of $2.2 million for the half year to December, despite lifting revenue by 6.7 per cent to $318 million.
The loss was attributed primarily to the performance of apartment developer Madisson Projects, which is being closed down.
Simonds said today it would build on its market-leading position in Victoria by focusing its expansion in Queensland, NSW and South Australia.
Gemmill Homes was established in 2004 and in 2014-15 constructed 591 houses, ranking it eighth in WA, according to the Housing Industry Association’s Housing 100.
Its revenue in 2015 was $132 million, according to Simonds.
Managing director Craig Gemmill told Business News it was business as usual, but he would remain open to discussions with Simonds or other groups in future.
The business is 65 per cent owned by director John Wilson, with Mr Gemmill owning the remaining 35 per cent.
