Worth noting that Galliford Try's full-year results are due out tomorrow. So I think I'll delay assessing this corporate action properly until then - but I do notice that the segmental breakdown in last year's report has Linden Homes and Partnerships & Regeneration contributing 42% of Galliford Try's total revenues between them and 35% of its net assets, but 109% of its profit before tax. So it's been a confused picture whether it should be counted as a Housebuilder or a Construction company for diversification purposes - but daveh's figures say pretty clearly that the market thinks most of the value of the company lies in its Housebuilder activities, and I can see why.
What this corporate action does mean, assuming it goes ahead, is that after it my HYP will contain two holdings in place of its current Galliford Try holding. The Bovis holding will be a large fraction of the current Galliford Try holding size, which makes it about 2/3rds of an average holding for my HYP, and (without yet having checked properly) I think it will be pretty much a pure Housebuilder holding. The remaining Galliford Try holding will be a small fraction of its current size, which makes it about 1/6th of an average holding (*), will be pretty much a pure Construction holding, and unless the company has turned its Construction divisions around since last year, a long way from being profitable enough to really sustain a dividend.
A bit of background with regard to my HYP is that it has two other holdings that are clearly housebuilders (Barratt Developments and Taylor Wimpey) and none that are clearly Construction companies. So this corporate action looks likely to leave it nearly "tripled up" in Housebuilders and with virtually nothing in Construction (**), and what there is in Construction doesn't look all that good to me, in any of last year's annual report, the interim results earlier this year or July's trading statement. This is one of the things I'll be looking at in particular in tomorrow's full-year results, as there is a glimmer of hope in the trading statement in the form of its statement that "The Aberdeen Western Peripheral Route is complete ..." - that's been a bit of an exceptional cost nightmare for the company IIRC.
So it looks unlikely that I'll especially want what's left of Galliford Try in my HYP after Linden Homes and Partnerships & Regeneration have gone, and it will be a very small holding for my HYP, which really needs to be either topped up or tidied up - the latter looking more likely to me at present. And I don't think I'll want to remain "tripled up" in Housebuilders, especially as the sector looks likely to be delivering 10%+ of my HYP income after this action, so I'll be wanting to review all three of Barratt Developments, Bovis Homes and Taylor Wimpey, and quite likely concluding that one of them ought to go... So it's very possible that I'll conclude that I want to get rid of both parts of Galliford Try, and in that case it may well seem best just to get rid of the whole thing now.
But I emphasise that that's just an indication of which way my thoughts are going, that they're heavily influenced by what else happens to be in my HYP, and tomorrow's results may cause them to change markedly. So it's definitely not meant as advice to sell - just as an illustration of how I would go about thinking about a rather messy-to-take-into-account corporate action like this one.
(*) Yes, 2/3 + 1/6 = 5/6 is less than 1 - but that's because the existing Galliford Try holding is somewhat less than average for my HYP.
(**) Well, actually it was like that already, at least as the market views Galliford Try - what this corporate action really brings out is that the market disagrees with my previous assessment of the relative values of the different parts of the company. I made that assessment quite a few years ago and I wasn't at all certain about it, so I think it likely that either it was always wrong or it has become so - so I'm not saying that I disagree with the market's assessment, just that it's caused me to re-assess (provisionally today, and I'll have a proper look at it when the annual report comes out - which might or might not be together with tomorrow's full-year results).