Elliott Advisors condemns outgoing Taylor Wimpey boss over management ‘missteps’

US private equity giant Elliott Advisors has written to the board of housebuilder Taylor Wimpey, slamming poor decisions by outgoing chief executive Pete Redfern.

Elliott, which is one of the company’s biggest shareholders, said the business must win back lost credibility with investors and search for a new chief executive externally after the former boss quit earlier this week after 14 years.

In the letter, the activist investor said: “Taylor Wimpey is a business with extraordinary potential, powered by talented employees dedicated to delivering high standards of product quality and customer satisfaction.

“Yet for all this promise, the company continues to fall short of achieving the opportunity inherent in the business.

“In particular, a series of operational and strategic missteps has resulted in persistent share-price underperformance, leaving shareholders frustrated and lacking confidence in the company.

“With the recent resignation of the CEO following reports of Elliott’s involvement, the company has taken an important first step toward the change that Taylor Wimpey needs to restore this lost confidence.

“However, the board now finds itself at a critical juncture: To remedy its long-term underperformance and regain credibility with investors, the board’s process to find a new CEO must be transparent and thorough; it must focus on external candidates who have not been a party to the underperformance to date; and it must be accompanied by governance enhancements to support the new CEO with the right kind of operational experience and expertise.”

Elliott went on to criticise the company’s plans laid out in 2018 of focusing on large-scale sites, which it said led to sale-price erosion.

It added that Taylor Wimpey was the worst-performing company in its sector during the Covid-19 pandemic, pointing out its decline was 39% compared to Barratt and Bellway’s decline of 28% to 29% and Persimmon’s of 14%.

The investor said: “We believe this share price underperformance is primarily due to the collapse in investor confidence in the company’s leadership in recent years, the aforementioned strategic failings, together with a history of overpromising and under-delivering.”

Taylor Wimpey said: “We have not met with Elliott and prior to today’s published letter we have not had any proposal from them.

“Taylor Wimpey delivered record interim profits and increased guidance for the full year in August.

“This follows a successful and well-timed £500 million equity raise in 2020 which enabled the company to invest in a total of £1.7 billion of new land at a time when there was a lack of competition in the land market and prices were considerably lower than they are today.

“The company is set for another year of growth in 2022 and given the equity raise will deliver accelerated growth from 2023.”