Notice: Barratt and Redrow £2.5bn Housebuilder Merger Cleared After CMA Monopoly Probe

Britain's competition regulator has cleared one of the biggest deals in the UK housebuilding sector after two of the country's largest developers agreed to binding measures to protect local competition. On 4 October 2024, the Competition and Markets Authority (CMA) approved the £2.5bn merger between Barratt and Redrow, a deal that had been agreed in August, concluding that concerns about the price and quality of new homes in parts of Shropshire and Cheshire had been resolved.

Why the regulator intervened

The CMA had previously said there were no concerns about a monopoly at national level. Its objections were strictly local: the regulator feared that Barratt's takeover of Redrow could lead to higher prices and lower-quality homes for buyers in an area around Whitchurch, including the nearby towns of Nantwich, Ellesmere and Market Drayton. Each of the companies has a large development in one of those towns, which placed them in direct competition with one another in the same local housing market.

The remedies that cleared the deal

To win approval, the Leicestershire-based Barratt and Flintshire-headquartered Redrow put forward commitments covering the two overlapping sites:

• the companies agreed that remaining homes at the developments will be sold by an independent agent, and the CMA approved their proposal to appoint Savills to manage those sales;
• a CMA-approved monitor will oversee undertakings to maintain Redrow's build quality and service on the Kingsbourne site in Nantwich.

Joel Bamford, the CMA's executive director for mergers, said the measures put forward by the companies represented "as comprehensive a solution as is reasonable and practicable".

Integration, savings and jobs

The firms expect to fully merge their operations within 18 months, with efficiencies and cost savings due after three years. Those savings could net £90m a year, but the combination carries a one-off restructuring cost of about £73m. Overlapping roles are expected to be cut, which could lead to the loss of about 10% of jobs across the combined business.

Barratt chief executive David Thomas said: "With this combination, we have created an exceptional housebuilder in terms of quality, service and sustainability, able to accelerate the delivery of the homes this country needs. Our focus now is on integrating our businesses as efficiently and effectively as we can to deliver the expected benefits."

Company details

Barratt — housebuilder based in Leicestershire, United Kingdom; Redrow — housebuilder headquartered in Flintshire, United Kingdom. More information about the acquirer is available on its website: Barratt Developments.