The £2.5bn acquisition by the UK’s biggest housebuilder, Barratt, of its smaller rival Redrow has been given the green light by the UK’s competition watchdog.
The Competition and Markets Authority said it had decided to accept undertakings made by both companies to address its concerns over a potential local competition issue, which means the deal will not be referred for a longer, phase 2 investigation.
The CMA had been concerned that a Barratt development in Whitchurch, Shropshire, was close to Redrow’s 324-home development in Nantwich, Cheshire, and found a “realistic prospect of an SLC (substantial lessening of competition)”.
As part of the undertakings, the companies agreed to appoint Savills as an independent third-party agent to manage the sales process of the remaining unsold houses at Redrow’s Nantwich site.
The merged group, called Barratt Redrow, is expected to build about 23,000 homes a year and have a turnover of more than £7bn. Trading in the shares on the London Stock Exchange under the new name will start on Monday. The Redrow shares were delisted in late August.
Barratt said it would begin the integration of the businesses, which is expected to take a year and a half.
Its chief executive, David Thomas, who leads the combined group, called the day a “significant milestone for Barratt Redrow, as we come together as one organisation”. He said the combined business would be able to “accelerate the delivery of the homes this country needs”.
He added: “Together, we offer a broader range of homes and price points for our customers, who we will continue to put at the heart of everything we do. Our focus now is on integrating our businesses as efficiently and effectively as we can to deliver the expected benefits of the combination.”
The Redrow boss, Matthew Pratt, will continue to run the building company within the wider group, and join its board.
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The all-share deal has been supported by both boards and by Steve Morgan, who started Redrow 50 years ago with a £5,000 loan from his father after working on buildings sites.