Barratt’s £2.5bn buyout of Redrow set to complete despite watchdog’s concerns
The company said it is temporarily putting aside concerns from the Competition and Markets Authority so it can go ahead with the buyout.
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Your support makes all the difference.Housebuilder Barratt is set to complete its purchase of Redrow later this week, despite a UK watchdog saying local competition concerns need to be addressed for the £2.5 billion takeover to go ahead.
The company said it is temporarily putting aside concerns from the Competition and Markets Authority (CMA) so it can go ahead with the buyout.
The CMA had said earlier this month that the acquisition could lead to higher prices and lower quality homes in one area – in and around Whitchurch, Shropshire.
It did not flag any concerns about the merger on a national level.
Barratt said on Monday that Whitchurch represents just one of more than 400 areas where the two companies overlap, and that both firms are working to come up with solutions to address those limited concerns.
This, it hopes, will avoid the investigation being taken further and mean the businesses will get the regulator’s green light to merge.
Barratt said completing the acquisition, following a court hearing scheduled for Wednesday, would remove any uncertainty for staff, the supply chain and wider stakeholders of both businesses.
The decision also means it expects the CMA to impose an enforcement order on both firms, which would prevent Barratt and Redrow from integrating their two businesses until the regulator is happy its concerns have been dealt with.
Whilst we are aware of Barratt’s intention to complete its deal with Redrow imminently, our competition concerns still stand
A spokesman from the CMA said: “Whilst we are aware of Barratt’s intention to complete its deal with Redrow imminently, our competition concerns still stand.
“The CMA will take such action as appropriate to ensure competition is preserved whilst our investigation continues.”
The two firms are expecting to have fully merged within 18 months of the acquisition, with efficiencies and cost savings due to take shape after three years.
The tie-up is expected to lead to cost savings of at least £90 million a year, with a one-off cost of making these savings of about £73 million.
This is expected to partly be achieved by a restructuring of staff and offices as they cut overlapping roles, which could lead to the loss of about 10% of jobs across the combined business.