The two housebuilders revealed the double approach in statements to the stock market last week.

Bellway, which has a turnover of £3.4 billion, made an offer to buy the entire share capital of its smaller rival £900m-turnover Crest Nicholson on 7 May.

Under the rejected £650m deal, Crest Nicholson shareholders would have received 0.093 shares in Bellway for each share they hold, with an implied value of 253 pence per share with a premium of around 18.8%. Crest Nicholson would have held 17% of the enlarged group’s share capital.

A Bellway spokesperson said “The board of Bellway believes there is compelling strategic and financial rationale for a combination of Bellway and Crest Nicholson which would bring together the strength of each business with complementary brands”

However, a Crest Nicholson spokesperson said the proposal “significantly undervalued Crest Nicholson and its future standalone prospects and was not in the best interests of Crest Nicholson’s shareholders.”

The news of the takeover bids emerged after Crest Nicholson announced it made a £31m pre-tax loss in the six months to April, compared to a £28m profit the previous year. Revenue was also down 9% year-on-year to £257.5m. The figures have been impacted by Crest Nicholson discovering it needs to spend £31.4m to fix build defects.

A merger of Bellway and Crest Nicholson would create a business with a turnover of around £4.3bn.