Green light finally expected for £2.5bn Barratt and Redrow mega-merger

The £2.5bn mega-merger of housebuilders Barratt and Redrow looks set to be finally given approval by the Competition and Markets Authority (CMA).

The watchdog launched an investigation into the proposed deal in June after it was first announced in February.

Earlier this month, the CMA said that the deal hinged on the sale of just 10 houses.

Now, the watchdog has said it considers that there are reasonable grounds for believing that the deal will be approved after a series of compromises were put forward by Barratt and Redrow.

The CMA has until 18 October to decide whether to accept the changes or refer the deal to a phase two investigation.

Earlier this month, the watchdog said the deal could lead to a “substantial lessening of competition” unless the homes are sold ahead of the proposed deal being completed.

The CMA said that while the merger would not affect competition on a national scale, it added that the two companies currently hold a significant share of land in the catchment area around Barratt’s Tilstock Road development and Redrow’s Kingsbourne development in Nantwich.

The CMA warned that the merger could result in “higher prices and lower quality homes” for buyers in this specific region.

Barratt and Redrow’s plans appease CMA

Under the proposed undertakings, unsold houses would be sold by an independent third part agent, unbuilt houses and infrastructure would be completed at Redrow’s Kingbourne development.

After sales services “to a level meeting or exceeding Redrow’s pre-merger standards” would also be provided to all homebuyers.

The watchdog said: “The CMA believes that the proposed undertakings, or a modified version of them, might be acceptable as a suitable remedy to the [substantial lessening of competition (SLC)] identified by the CMA, given that the merged entity would be committed to address the competition concerns identified at the local catchment area centred around the Barratt Development at Tilstock Road, which includes Redrow’s Kingsbourne Development (the area affected by the proposed undertakings).

“This covers the entire increment identified in the SLC decision, in relation to the price of unsold plots, the quality and completion of the build-out of unbuilt plots and unbuilt Infrastructure and the after-sales service to all of Redrow’s customers.

“The CMA considers that the proposed undertakings will provide protections to customers that have already bought their houses, or will buy houses from the merged entity (under the Redrow brand) at the Kingsbourne development in the near future.”