Barratt to buy Redrow for £2.5bn
The housebuilders estimate the deal could result in savings of £90m a year.
Barratt Developments – which also owns David Wilson Homes – has agreed to acquire the entire issued shares of Flintshire-based Redrow Homes for £2.5bn.
Redrow shareholders can expect a 27% premium on the value of their shares under the terms of the deal.
Once the acquisition completes later this year, Redrow shareholders will hold approximately 32.8% of the combined group and Barratt shareholders will hold approximately 67.2%.
The all-share combination will see the creation of Barratt Redrow plc, which will boast a pipeline of almost 100,000 homes across the UK.
The deal comes at a tough time for housebuilders as high mortgage rates and build costs impact sales and completions. This year, Barratt expects to complete thousands fewer homes this financial year compared to 2023.
Despite economic turmoil, last year, the two volume housebuilders notched up combined revenues of £7.5bn and completed 22,642 homes.
Read the full Stock Exchange filing the full Stock Exchange filing.
Steve Morgan, Redrow’s founder and owner of Bridgemere Securities, Redrow’s largest shareholder with 16%, said: “During the 50 years since I founded Redrow, I could not be more proud of the unique reputation it has earned for building premium homes and thriving communities.
“Barratt is a home builder I have long admired due to their like-minded attention to quality. I am confident that the Barratt/Redrow combination will create a standout home builder for the future and accelerate the delivery of much-needed homes across the UK.”
David Thomas, group chief executive of Barratt, will lead the combined group following the completion of the deal.
He said the acquisition of Redrow would “leverage the respective strengths of both Barratt and Redrow, delivering significant benefits”.
Matthew Pratt will remain as Redrow chief executive. He said the coming together of the two brands would leave the companies in a “much better position to offer a broader range of high-quality and energy-efficient homes to customers”.
The deal will see Barratt’s top executives and non-execs take their place on the board of the combined group alongside Redrow’s Pratt.
Nicky Dulieu, currently senior independent director at Redrow, and Geeta Nanda, currently a non-executive director at Redrow, will be kept on as non-execs.
Any executive or non-executive directors of Redrow not appointed to the board of the combined group will step down from the Redrow board upon completion of the deal.
At the time of writing, Barratt’s share price was down 7.83% to 488.50p compared to yesterday. Redrow’s was up 12.67% to 676p.
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Surely the competition markets authority will look into the deal. The consolidated house builders market wont be good for the consumer.
By Anonymous
The coming together of two premium brands both with a level of vision & capability that other Housebuilder’s can only dream of.
By Impressed
Less competition and higher prices for buyers. I don’t buy the’times are tough’ comment. Volume builders are still incredibly profitable.
By Peter Black
I can see the CMA passing this. There are ton of ways to frame the market in which it would pass, but that completely ignores the fact that, say, in Cheshire if you want a certain type of house in a certain type of location Redrow seem to have all the sites sewn up.
By Rich X
Are those two companies a fit ?
By Peter Chapman
Everyone always tells me Redrow are a ‘premium’ housebuilder so who are the ones which are more entry level / mass market? Bellway and Persimmon?
By Rick
I thought they were the same company already. The houses they deliver all look the same, packed onto tiny plots with teeny tiny little gardens
By Anonymous