Barratt’s £2.5bn merger with Redrow now hinges on sale of 10 houses
A £2.5bn merger between housebuilders Barratt and rival Redrow now hinges on the sale of 10 houses after the Competition and Markets Authority (CMA) said the deal could create local competition issues.
In a ruling issued this morning the watchdog said the deal, announced in March 2024, could lead to a “substantial lessening of competition” unless the homes are sold ahead of the proposed deal being completed.
The CMA said that while the merger would not affect competition on a national scale, it added that the two companies currently hold a significant share of land in the catchment area around Barratt’s Tilstock Road development and Redrow’s Kingsbourne development in Nantwich.
The CMA warned that the merger could result in “higher prices and lower quality homes” for buyers in this specific region.
However, the watchdog also acknowledged that following the deal, the company would still face “substantial competition” from other housebuilders, as well as from homes available on the second-hand market across the UK.
In the statement CMA said: “The CMA has decided, on the evidence currently available to it, that it is or may be the case that this merger may be expected to result in a substantial lessening of competition within a market or markets in the United Kingdom.
“This merger will be referred for an in-depth, phase two investigation unless the parties offer an acceptable undertaking to address these competition concerns.”
This comes after the CMA said in March it was looking into the merger over fears it may damage competition.
The newly-merged group would be expected to build about 23,000 homes a year and make more than £7bn in revenue.
Barratt said in March the deal would create the UK’s largest house builder and would help accelerate the “delivery of homes this country needs”.
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, added: “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.”
The CMA’s scrutiny of the Barratt and Redrow merger comes amid an investigation into eight major housebuilders, including the two firms, over allegations of sharing commercially sensitive information that could impact house prices.
This probe, launched in late February, targets some of the industry’s biggest players after evidence suggested they were exchanging confidential details, such as sales prices and buyer incentives.
The watchdog stated that such actions “prevented and distorted” competition, potentially influencing pricing decisions and the pace of new home construction.