Barratt has agreed a deal to acquire rival housebuilder Redrow for £2.5bn. The boards of both groups have recommended the all-share combination, which would create the UK’s largest housebuilder.
Under the terms of the deal, Redrow shareholders will receive 1.44 new Barratt shares for each Redrow share. Following completion of the deal, Redrow shareholders will hold approximately 32.8% of the combined group and Barratt shareholders will hold approximately 67.2%.
The directors of the two businesses said the ‘combination’ would create an “exceptional UK homebuilder in terms of quality, service and sustainability, delivering excellence and driving innovation for customers, employees, sub-contractors and the supply chain”.
They added the combined group could achieve pre-tax “cost synergies” of at least £90m on an annual run-rate basis by the end of the third year following completion of the deal.
The directors said Redrow founder Steve Morgan would vote in favour of the proposed deal.
David Thomas, group chief executive of Barratt, who will lead the combined group, said: ”We have great respect for Redrow, its overall strategy, its leadership and employees, and its high-quality homes and communities. 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.”
Morgan added: “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 likeminded attention to quality. I am confident that the Barratt/Redrow combination with their three high-quality complementary brands, will create a standard home builder for the future and accelerate the delivery of much needed homes across the UK.”
