Two of Britain’s leading homebuilders, Barratt and Redrow, have announced a merger agreement worth £2.5bn.
The mega-merger, which will see Barratt own 67 per cent of the combined group, will tie together the two firms and – in Barratt’s words this morning – “create an exceptional UK homebuilder in terms of quality, service and sustainability that builds high-quality, sustainable homes and communities for customers across the UK, addressing the country’s need for homes.“
Based on the closing price of Barratt shares on 6 February 2024, the deal values Redrow at around £2.5bn. This represents a premium of about 27.2 per cent over the closing price of Redrow shares on the same date.
Redrow Shareholders will hold approximately 32.8 per cent. of the Combined Group and Barratt Shareholders will hold approximately 67.2 per cent. of the Combined Group.
Matthew Pratt, Group Chief Executive of Redrow, said: “Redrow and Barratt combined creates a leading UK homebuilder. Together, we’ll be in a much better position to offer a broader range of high-quality and energy efficient homes to customers.”
Mergers in the property development industry are becoming increasingly common.
Just two years ago, fellow house builder, Vistry merged with smaller rival Countryside, in a £1.27bn deal.
Separately Barratt reported its interim results this morning.
The firm reported profit before tax of £95.2m down from £501.5m in the same period the year before.
David Thomas chief executive of Barratt Developments PLC said: “Whilst our operating environment is still challenging, Barratt has remained focused on delivering high-quality, energy-efficient and well-designed homes across the country. We continue to lead the industry in customer service, build quality and sustainability.”