As Leicestershire-based housebuilding giant Barratt’s £2.5 billion purchase of rival Redrow Homes continues to progress, the Competition and Markets Authority (CMA) has concluded a Phase 1 investigation into the deal.
The CMA has found that overall, the merger does not raise competition issues except for concerns regarding the supply of new build private residential housing in one of the more than 400 local areas where the two companies overlap.
The parties have until 15 August 2024 to offer undertakings to the CMA which would address its concerns and avoid the need for a reference to a full Phase 2 investigation.
Barratt and Redrow say they intend to engage with the CMA on the local area in question centred around Whitchurch, Shropshire which contains four Barratt developments and a Redrow development that has fewer than 10 plots remaining to sell. The proposed undertakings will seek to address the future conduct of sales and build on the Redrow site. No land disposals are being anticipated or proposed.
Joel Bamford, Executive Director for Mergers at the CMA, said: “Prospective homebuyers must not be disadvantaged as a result of deals like this one – with the potential loss of competition leading to even higher house prices or lower quality homes.
“Our initial investigation found concerns specifically in one area in and around Whitchurch, the companies now have the opportunity to agree workable solutions which address our concerns rather than move to a more in-depth investigation.”
David Thomas, Group Chief Executive of Barratt, said: “We are pleased that the CMA has found there would be no harm to competition in all but one of the areas in which Barratt and Redrow overlap.
“We remain confident that the combination of Barratt and Redrow will be approved and that it is in the best interests of our customers and wider stakeholders. Together we plan to build on our shared strengths and create an exceptional homebuilder, in terms of quality, service, and sustainability, helping to deliver the homes the country needs.”
Matthew Pratt, Group Chief Executive of Redrow, said: “Barratt and Redrow are two leading housebuilders, with strong reputations for quality, service and sustainability that have been decades in the making. Once the CMA process has completed, we are looking forward to our future as one team, accelerating the delivery of high-quality homes that the country so urgently needs.”
