Legal & General Group (LON: LGEN) announced Wednesday that it has agreed to sell its UK house builder, Cala Group, to a consortium led by Sixth Street Partners and Patron Capital for an enterprise value of £1.35 billion.
The company said the sale will generate cash proceeds of £1.16 billion for LGEN, which plans to reinvest the funds in its core businesses and increase returns to shareholders through buybacks.
Around £500 million will be paid at closing, with the remaining consideration being paid over the next five years on a deferred, non-contingent basis. As of HY24, Cala had a Net Asset Value of £1.15 billion and generated operating profits of £42 million, according to LGEN.
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The transaction is expected to complete in the fourth quarter of 2024.
L&G’s decision to sell Cala aligns with its strategy to simplify its portfolio and focus on its core, synergistic businesses. The company acquired Cala in 2013 and has seen strong growth in the business during its ownership.
Kevin Whitaker, CEO of Cala, stated: “The acquisition by Sixth Street Partners and Patron Capital demonstrates confidence in Cala’s business plan and growth potential, as our talented team continues to build high quality, sustainable new homes throughout the UK. L&G has been a great support to Cala throughout its investment and ownership.”
For Legal & General, António Simões, the group CEO, said: “The sale announced today will provide capital to deliver our strategic goals of sustainable growth alongside enhanced returns for shareholders.”
At the time of writing, Legal & General shares are down around 1.9% following the news.
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