What a merger would mean for staff and rivals

The two companies have predicted that about 5% of its combined staff of 14,000 – about 700 people – would be made redundant.

A spokesperson for the companies said most of the redundancies would be at the their headquarters and would affect office rather than construction workers.

“The regions will be more or less unaffected,” she added.

On Monday, Ian Smith, Taylor Woodrow’s chief executive, said its construction business, which has a turnover of £550m, would not be put up for sale.

However, it could become a takeover target, and as 90% of its work is for external clients, it is not intrinsically tied to the housing business.

Market leaders this week said a merger would not affect the government’s housing targets. This is because the planning system is already holding up so many schemes.

The merger would create a gulf between the top three housebuilders and the rest, leaving fellow quoted companies Redrow, Bellway and Bovis Homes as takeover targets themselves.