Morgan may merge Redrow with private property group

Redrow founder Steve Morgan may take the housebuilder private by merging it with his Bridgemere property group.

According to one source close to the situation, that is one of three options that are under consideration. The source said: “It is a fluid picture but he will either return the company to its former glory, turn it around and sell it, or take it private. If he goes for the last one, he’ll need to do it in the next two years while he can get it at a good price.”

In addition to the potential for greater financial gain, the source said an attraction for Morgan would be the ability to run the company free from the scrutiny a public company is subjected to.

The source added: “It will also come down to the state of the housing market and whether he could fund such a move.”

A spokesperson for Morgan said he was not yet ready to talk about his future plans for the business.

Some analysts have questioned the wisdom of Morgan’s return to housebuilding. One said: “He’s clearly a better guy to have at the helm than most, but what magic wand can he wave in this kind of terrible market?”

Meanwhile, speculation mounted this week that Greg Locke, the chief executive of Bridgemere, will eventually join Morgan at Redrow.

It is understood that a plan for both to take control at the company was abandoned in the run-up to last week’s announcement that Morgan would become chairman.

Kevin Cammack, an analyst at Cenkos Securities, said: “I would be truly surprised if Steve Morgan didn’t bring him in but his advisers may have told him to tread softly at the moment, given that a company with an executive chairman who owns 30% of the business is not best practice.”

Morgan, who set up Redrow in 1974, took a 29.9% stake in it earlier this month.