BY Richard Summerfield
The UK’s biggest housebuilder, Barratt, has agreed to acquire its smaller rival Redrow in an all-stock deal worth around £2.5bn.
The merged group, to be called Barratt Redrow, is expected to build about 23,000 homes a year and have a turnover of more than £7bn. The combined market value of the two companies was £7.2bn when financial markets closed on Tuesday, the day before the deal was announced.
Barratt shareholders will retain 67.2 percent of the new group, leaving Redrow shareholders with 32.8 percent. The Redrow brand will be retained for marketing new homes and its Heritage collection, aimed at more affluent buyers, added to the portfolio, which also comprises Barratt’s more affordable David Wilson Homes. Under the terms of the deal, each Redrow shareholder will receive 1.44 new Barratt shares for each share they hold.
According to Barratt, the deal will allow for £90m in cost-saving synergies and will offer opportunities for the new group to consolidate its supply chain. Subject to regulatory and shareholder approval, the deal is expected to complete in the second quarter of this year.
“We have great respect for Redrow, its overall strategy, its leadership and employees, and its high-quality homes and communities,” said David Thomas, group chief executive of Barratt. “This is an exciting opportunity to bring together two highly complementary companies, creating an exceptional homebuilder in terms of quality, service and sustainability, able to build more of the high-quality homes this country needs. The Combined Group would leverage the respective strengths of both Barratt and Redrow, delivering significant benefits to our people, our supply chains, and - most importantly - our customers.”
“Redrow and Barratt combined creates a leading UK homebuilder,” said Matthew Pratt, group chief executive of Redrow. “Together, we’ll be in a much better position to offer a broader range of high-quality and energy efficient homes to customers. The Redrow brand, with its premium, characterful homes, has an excellent reputation and will remain a key part of the Combined Group. As with Barratt, Redrow’s fifty-year success story is based on its people, products and supply chain partners. Both businesses are a great fit and there are many exciting opportunities to innovate and share knowledge across a range of different areas.”
“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,” said Steve Morgan, founder of Redrow. “Barratt is a home builder I have long admired due to their likeminded attention to quality. I am confident that the Barratt / Redrow combination with their three high-quality complementary brands, will create a standout home builder for the future and accelerate the delivery of much needed homes across the UK.”
News: UK homebuilder Barratt to buy Redrow in 2.52 billion pound deal