Barratt's £2.5bn takeover of Redrow approved by watchdog after concerns resolved

The Competition and Markets Authority accepted the companies' measures to alleviate competition concerns. The regulator had previously expressed concerns that the deal could lead to higher prices and lower quality homes in one area

Barratt's £2.5bn acquisition of Redrow has been given the go-ahead, following regulators' approval of measures put in place by the companies to alleviate competition concerns.

The Competition and Markets Authority had previously expressed worries that the deal could result in higher prices and lower quality homes in one particular area – Whitchurch, Shropshire, where Redrow has planning permission for 324 homes. Despite these concerns, Barratt proceeded with the deal, stating in August that it would waive conditions imposed by the regulator and took ownership of Redrow’s shares.

However, the firms have been required to operate independently until all competition issues were resolved. Measures proposed by the two companies include appointing property agents from Savills to sell the houses, and a commitment to ensure the homes are "constructed to Redrow’s quality standards and for construction to be completed in a timely manner".

Joel Bamford, executive director for mergers at the CMA, stated on Friday that the measures offered by the companies represented "as comprehensive a solution as is reasonable and practicable". He added that they "remedy, mitigate or prevent the SLC (significant lessening of competition) identified... and any adverse effects resulting from it".

The two firms anticipate full integration within 18 months of the acquisition, with cost savings and efficiencies expected to materialise after three years. The merger is predicted to result in annual cost savings of at least £90m, with a one-time cost of approximately £73m to achieve these savings.

This is likely to be partly accomplished through staff and office restructuring to eliminate duplicate roles, potentially resulting in a 10% job loss across the merged business. Barratt's CEO, David Thomas, stated: "With this combination, we have created an exceptional housebuilder in terms of quality, service and sustainability, able to accelerate the delivery of the homes this country needs."

"Together, we offer a broader range of homes and price points for our customers who we will continue to put at the heart of everything we do. Our focus now is on integrating our businesses as efficiently and effectively as we can to deliver the expected benefits of the Combination."

"We will leverage the best of both companies to deliver significant benefits to our people, our customers and our supply chain partners, and ensuring that Barratt Redrow is set up to deliver long term value to all of its stakeholders."