Barratt Developments plans to complete the acquisition of Redrow this week

Barratt Developments will complete its acquisition of Redrow later this week, six months after initially announcing the takeover.

The £2.5bn deal would create Britain’s largest housebuilder, with the capacity to build around 23,000 homes a year and generate more than £7bn in revenue.

Following completion of the acquisition, Redrow shareholders would control almost a third of the business, which will be renamed Barratt Redrow, while Barratt investors would own the remaining two-thirds.

The Competition and Markets Authority began investigating the merger in June amid concerns it would substantially reduce competition in Britain’s residential construction sector.

In early August, it concluded that the deal would not cause any competition concerns across the UK, but warned it could lead to higher prices and poorer quality housing in an 11-mile area around Whitchurch, Shropshire.

The site in question contains four Barratt developments and one Redrow development with fewer than ten plots remaining to be sold, and includes the towns of Nantwich, Ellesmere and Market Drayton.

Barratt and Redrow said they were working with the CMA “with the aim of agreeing appropriate commitments” that would address its anxieties.

However, Barratt has decided to brush aside the CMA’s concerns and press ahead with the acquisition this week to remove uncertainty for staff, the supply chain and “wider stakeholders”.

The two businesses are expected to fully merge within 18 months and receive the full efficiencies and cost savings after three years.

Barratt’s current chief executive, David Thomas, will become chief executive of the combined group, while its finance chief, Mike Scott, will become chief financial officer.

Russ Mould, investment director at AJ Bell, said: “Barratt hopes the timing will be good as the industry looks to pick itself up off the ground after a tough few years marred by a weak property market and rising interest rates.”

Barratt completed 14,004 homes in the year to June 2024, which was at the top end of guidance but significantly below the 17,206 properties completed in the previous 12 months.

The average sale price of their homes was also £307,000, up from more than £319,000 the previous year.

However, Britain’s housebuilders are becoming more optimistic about a near-term recovery, partly because of falling mortgage costs and the Labour government’s plans to overhaul planning laws.

When the BoE cut the UK base rate by 0.25 percentage points to 5 per cent in early August, many lenders including NatWest, Virgin Money and Halifax responded by cutting their mortgage rates.

Barratt Developments Stock rose 1 percent to 541 pence on Monday morning, while Redrow shares rose 2.4 percent to 778.5 pence.