Barratt has announced its intention to complete the £2.5bn merger with Redrow, waiving a Competitions & Markets Authority (CMA) condition to do so
In an announcement to the London Stock Exchange today(19 August 2024), Barratt confirmed that it had waived a CMA approval condition to go ahead with the merger with Redrow.
The company will continue to work with the CMA on outstanding queries around competition in Whitchurch, Shropshire, where the high presence of Barratt and Redrow developments in an 11-mile area has raised concerns that housebuyers may face higher prices or lower quality homes.
The CMA does not have any competition concerns regarding the merger on a national scale. The deal, which Barratt intends to complete within the next 18 months, would consolidate Barratt’s position as the UK’s largest housebuilder, with an estimated turnover of over £7bn.
Barratt and Redrow want to agree “suitable undertakings” with the CMA
Arguing that Whitchurch is just one of over 400 areas where Barratt and Redrow overlap, the two firms are reportedly working on solutions to address the CMA’s concerns.
Both housebuilders expressed a desire to agree “suitable undertakings” to prevent a phase two investigation from the CMA, which could halt the merger.
A Barratt spokesperson commented that waiving the CMA condition: “removes uncertainty for the employees, supply chain and wider stakeholder groups of both businesses, and allows us to accelerate the creation of an exceptional UK homebuilder in terms of quality, service and sustainability, which in turn can accelerate the delivery of high-quality, sustainable homes and communities for customers across the UK, addressing the country’s need for homes.”
The Barratt-Redrow merger is expected to yield cost savings of around £90m a year after three years, partly achieved by a restructuring of staff and offices. This is estimated to lead to around 10% of jobs being lost across the combined business.
CMA approval is still needed for parts of the merger
Decisions such as changing the name to Barratt Redrow, appointing Matthew Pratt to the combined group board as well as non-executive directors Nicky Dulieu and Geeta Nanda, will require the approval of the CMA before the merger can complete.
Barratt anticipates the CMA to impose an enforcement order on both Barratt and Redrow to enforce this.
A CMA spokesman said: “Whilst we are aware of Barratt’s intention to complete its deal with Redrow imminently, our competition concerns still stand.
“The CMA will take such action as appropriate to ensure competition is preserved whilst our investigation continues.”
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