The CMA has approved the merge of 'Barratt Redrow' after local competition concerns.

It has recently been confirmed that Barratt Homes and Redrow will be merging into Barratt Redrow which is anticipated to be completed within 18 months of the acquisition. By agreeing to the developers' "undertakings," the CMA has decided not to move forward with a detailed phase 2 investigation into the £2.5 billion merger, which will see Barratt acquire Redrow. 

In its initial enquiry, the CMA expressed concerns about competition in a specific 11-mile area around Whitchurch, Shropshire, where Barratt has four developments and Redrow has one. The authority suggested the merger could lead to higher prices and lower-quality homes for buyers in the region. In response, Barratt and Redrow pledged to address the future sales and build process on Redrow's development to alleviate these concerns.

This month, the CMA confirmed that the housebuilders' proposals were "clear-cut and appropriate" to resolve the competition issues. As a result, the CMA has lifted its initial enforcement order (IEO), which had previously paused further integration of the businesses.

With the clearance granted, the merger can now proceed, leading to the creation of a combined entity called Barratt Redrow. Matthew Pratt has been appointed to the board of the merged group.

David Thomas, CEO of Barratt, said, “Today is a significant milestone for Barratt Redrow, as we come together as one organisation. 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.”

“Together, we offer a broader range of homes and price points for our customers who we will continue to put at the heart of everything we do. Our focus now is on integrating our businesses as efficiently and effectively as we can to deliver the expected benefits of the combination.

He added, “We will leverage the best of both companies to deliver significant benefits to our people, our customers and our supply chain partners, and ensuring that Barratt Redrow is set up to deliver long-term value to all of its stakeholders.”

Barratt recently projected it will build between 13,000 and 13,500 homes in the 12 months leading up to June 2025, which is a 7% decrease compared to the previous year.

What does this mean for employees within the two merging companies?

As part of the deal, approximately 10% of jobs across the combined business are expected to be cut, resulting in annual savings of at least £90 million for the leadership team. Although this is positive for the higher-positioned employees, this is less than ideal for other employees and will leave many people feeling uneasy. 

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