Troubled housebuilder Bovis Homes has rejected two merger proposals which valued the firm at nearly £1.2 billion.

The New Ash Green-based developer told shareholders it recently received preliminary offers from Redrow and Galliford Try.

The company knocked back both bids from its fellow FTSE250 housebuilders as “neither reflected the underlying value of the Bovis business”.

While Redrow has said it is not willing to improve its terms, discussions with Galliford Try are ongoing.

Bovis shares jumped 7% in early trading to 886p following the announcements.

The merger proposals come after the firm reported lower-than-expected annual pre-tax profits of £154.7 million last month and plans to set aside £7 million to pay compensation to customers after missing construction targets.

In December it surprised investors with a warning that it had “deferred” the completion of 180 homes until the early part of 2017, which it said would affect profits.

Less than a fortnight later, its chief executive of eight years David Ritchie announced he was quitting after 18 years with the business.

Galliford Try, which managed £2.7 billion of turnover last year, confirmed it had approached the Bovis board with an all share merger proposal.

It said its offer of 886p per share – valuing the business at nearly £1.2 billion – would have paid a 7% premium on the closing price of Bovis on the same date.

Galliford Try proposed equity in the combined group would be split 52.25% to Galliford Try shareholders and 47.75% to Bovis shareholders.

Meanwhile Redrow, which made revenues of £1.3 billion of 4,716 completions last year, said it made an initial approach on February 27.

It said valued the company at 814p a share, when Bovis shares were valued at 774p.

Its proposal consisted of paying 125p per Bovis share in cash and issuing 1.32 new Redrow shares in exchange for each Bovis share.

Bovis shareholders would have owned 32.4% of the new company.

Galliford Try said the merger would “create a new major housebuilder with national scale and geographic coverage through the combination of the 6th and 8th largest UK housebuilders by completions”.

Redrow added it “continues to believe the potential combination offers a compelling opportunity to create a combined business with the scale and operational strength to compete more effectively in the growing UK housebuilding market”.