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Housebuilding giant Barratt is set to complete its acquisition of rival Redrow later this week, the companies said in a joint statement.
The £2.5 billion all-share deal announced in February is under scrutiny by the Competition and Markets Authority, which began the first stage of its investigation in March.
But the CMA stopped the second stage of its investigation from going ahead after concluding the two companies had a “high combined share” in just one area, Whitchurch, Shropshire.
To remove any uncertainty, Barratt said it had “waived the CMA conditions to the Scheme and the parties expect to complete the merger (the “Completion”) later this week.”
“This will remove uncertainty for both companies’ employees, supply chains and wider stakeholder groups and enable us to accelerate the creation of a British housebuilder that excels in quality, service and sustainability. As a result, we will accelerate the delivery of high quality, sustainable homes and communities for customers across the UK and meet the country’s housing demand,” the company added.
As a result, the company said it expected the CMA to impose initial enforcement orders (IEOs) against the parties “to discourage any action that may adversely affect the CMA’s process”.
The company added that it expects the transaction to close within 18 months.
Once the merger is complete, it will create the UK’s largest housebuilder.
Barrett shareholders will own around 67.2% of the combined group, with RedRows accounting for the remaining 32.8%.
Anthony Codling, European head of housing and building supplies at investment bank RBC Capital Markets, said of the proposed merger: “That Barratt has chosen to go ahead with its proposed merger with Redrow, despite the minor issues raised by the CMA, is a good thing for Barratt, Redrow and homebuyers generally.”
“We believe the issues with the CMA are minor issues that can be easily resolved and are not significant enough to impede the planned merger between Barratt and Redrow. The sooner the merger is completed, the more homebuyers will be able to benefit from a greater choice of homes for sale by the newly formed combined group.”
The Barratt-Redrow merger would be bigger than the Vistry-Countryside partnership agreed two years ago, worth around £1.3bn, but the two housebuilders, Bellway and Crest Nicholson, will not merge.
Bellway has told investors it will not proceed with a £720 million takeover bid for rival Crest Nicholson.
The deadline for Bellway to make a formal offer is today.
Property giants to merge after shareholders approve £2.5bn deal
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