The merger between Barratt and Redrow, valued at £2.5bn, moves forward following regulatory approval, marking a significant shift in the UK’s homebuilding landscape.
- The Competition and Markets Authority (CMA) approved the merger after assurances were given to prevent reduced competition in Cheshire and Shropshire.
- The new entity is known as Barratt Redrow, with David Thomas appointed as the CEO and Matthew Pratt joining the board.
- The merger is expected to yield £90m in cost savings and enhance supply chain innovations.
- Concerns about local market impact were addressed by appointing Savills to oversee quality and timeline commitments for certain projects.
The landmark £2.5bn merger between two of the UK’s foremost homebuilders, Barratt and Redrow, has finally received the green light from regulators. This approval follows intensive scrutiny by the Competition and Markets Authority (CMA), which initially launched a probe in March due to fears over a potential “substantial lessening of competition (SLC)” in the housing market.
The CMA’s investigation centred on specific projects in Whitchurch, Shropshire, and Nantwich, Cheshire. There were concerns that the merger might lead to increased prices and compromised quality for homebuyers in these local areas. However, Barratt and Redrow proposed comprehensive measures, one of which involved engaging Savills to manage and ensure the quality and timely completion of Redrow’s existing housing developments. These measures played a pivotal role in allaying the CMA’s fears, which in turn enabled the merger to proceed without the need for a more extensive phase two investigation.
As a result of the merger, a new entity named Barratt Redrow has been established. David Thomas, who previously served as Barratt Developments’ chief executive, has taken the helm as CEO of Barratt Redrow, while Redrow’s Matthew Pratt has become a part of the board. This strategic consolidation is anticipated to bring about significant benefits, including £90m in cost savings. Furthermore, it is expected to drive innovation within the supply chain, ultimately broadening the range of available homes and their corresponding price points. As Thomas articulated, “With this combination, we have created an exceptional housebuilder in terms of quality, service and sustainability.”
The coordination between Barratt and Redrow outlines a clear commitment to maintaining standards and enhancing market offerings, which should also bolster subcontractors’ confidence in investing in the development of skilled labour and production facilities. This cooperation is vital for the future growth and sustainability of the sector.
Ultimately, the CMA determined that the solutions proposed by Barratt and Redrow were both reasonable and practical, effectively addressing the potential SLC and any adverse effects thereof. The decisive action taken by the companies has ensured that the merger not only complies with regulatory requirements but also paves the way for delivering quality residential solutions across the UK.
The successful merger of Barratt and Redrow represents a transformative step in the UK housing industry, promising enhanced quality and innovation.
