Barratt agrees to buy rival Redrow in deal worth £2.5bn

Barratt has agreed to buy rival Redrow in a deal worth £2.5bn.

The acquisition of Redrow’s entire share capital will create a housebuilding giant with a combined turnover of £7.5bn. The pair between them delivered more than 22,000 homes last year.

The board of Barratt said the move, which will require approval of shareholders and regulators, will generate pre-tax cost savings of at least £90m a year by the third year after the completion.

The combined group, which will be known as Barratt Redrow, will be led by current Barratt boss David Thomas, while Barratt’s chair Caroline Silver will be the chair of the combined group. Matthew Pratt, current boss of Redrow, will continue to serve as chief executive of the Redrow side of the business and act as group executive director.

Once the deal is complete, Barratt’s shareholders will own around two-thirds of the share capital and Redrow’s one-third.

See also: Top 50 Housebuilders

In a statement today, the two firms said the move would “realise significant cost synergies from procurement savings and a rationalisation of divisional and central functions”. They also said it would help maintain a robust balance sheet “better protected to operate throughout the cycle”.

Thomas added: “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.”

Pratt said: “Together, we’ll be in a much better position to offer a broader range of high-quality and energy efficient homes to customers.”