Barratt Developments and Redrow Plc agree to merge in £2.5 billion deal

LONDON, UK: Barratt Developments, the UK’s largest homebuilder, has announced that it will acquire its rival Redrow Plc in a £2.5 billion deal that will create a market leader in quality, service and sustainability.

The boards of both companies have agreed to the terms of the all-share offer, which will see each Redrow Plc shareholder receive 1.44 new Barratt shares. The deal values Redrow at a 27.2 per cent premium to its closing price on 6 February 2024, the last business day before the announcement.

Redrow Plc

The combination will bring together two companies with complementary geographic footprints and three highly respected brands – Barratt Homes, David Wilson Homes and Redrow. Redrow will be positioned as Barratt’s premium brand, offering customers a wider range of home types and price points.

The merged company will also benefit from significant cost synergies, estimated at £90 million per year by the end of the third year following completion. The deal is expected to enhance shareholder returns and deliver benefits for customers, employees, sub-contractors and the supply chain.

The Barratt Developments and Redrow directors said that the merger was a uniquely compelling opportunity to create an exceptional UK homebuilder that builds high-quality, sustainable homes and communities for customers across the UK, addressing the country’s need for homes.

The deal is subject to the approval of Redrow shareholders and the court, as well as regulatory clearances. It is expected to complete in the second quarter of 2024.

Commenting on the Combination, David Thomas, Group Chief Executive of Barratt, 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.”

Commenting on the Combination, 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.

The Redrow brand, with its premium, characterful homes, has an excellent reputation and will remain a key part of the Combined Group. As with Barratt, Redrow’s fifty-year success story is based on its people, products and supply chain partners. Both businesses are a great fit and there are many exciting opportunities to innovate and share knowledge across a range of different areas.”

Commenting on the Combination, Steve Morgan, Redrow’s founder said: “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 standout home builder for the future and accelerate the delivery of much needed homes across the UK.”

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