Barratt pushed ahead with £2.5bn Redrow merger despite CMA concerns

Housebuilders Barratt and Redrow have decided to push ahead with their £2.5bn merger despite issues raised by the competition regulator.

The merger, announced by the companies in February, has been under investigation by the Competition and Markets Authority (CMA) due to concerns that it could significantly reduce competition.

The two companies currently hold a large share of land in the catchment area around Barratt’s Tilstock Road development and Redrow’s Kingsbourne development in Nantwich.

However, Barratt said today that while the watchdog has not given the green light to continue with the merger it would press on with the combination.

The group said it has “waived the CMA Condition to the Scheme and the parties now intend to complete the combination (“completion”) later this week.”

” This 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 company added.

As a result, the company said it expected the CMA to impose an initial enforcement order (“IEO”) on the parties, “preventing any action which might prejudice the CMA’s process.”

It added that it now expected the deal to complete within 18 months.

Once completed the merger will create the UK’s largest house building firm, which Barratt said previously would help accelerate the “delivery of homes this country needs.”

Barrett’s shareholders will hold approximately 67.2 per cent of the combined group, whilst Redrow’s will account for the remaining 32.8 per cent. 

Mergers in the property development sector are not uncommon.  Just two years ago, fellow listed developer Vistry combined its business with smaller rival Countryside, in a £1.3bn deal. 

Correction: This article previously said the CMA had given the green light to the deal. The regulator has not approved the deal. Barrett and Redrow have decided to push ahead with the deal before CMA approval.