Builders' £2.5bn merger backed after monopoly probe

A £2.5bn merger of two housebuilding firms has been approved, after they allayed fears about the price of new homes in Shropshire and Cheshire.

The Competition and Markets Authority (CMA) had raised concerns that Barratt's takeover of Redrow could affect the market in Whitchurch and nearby Nantwich.

The companies each have a large development in one of the towns, and have now agreed that remaining homes will be sold by an independent agent.

The merger of Leicestershire-based Barratt and Redrow, whose headquarters are in Flintshire, was announced in August.

The CMA had said there were no concerns about a monopoly nationally, but feared the deal could lead to higher prices and lower-quality homes for buyers in an area around Whitchurch, including Nantwich, Ellesmere and Market Drayton.

However earlier, it approved the merged firms' proposal to appoint independent agents Savills to manage sales.

A CMA-approved monitor will also oversee undertakings to maintain Redrow's build quality and service, on the Kingsbourne site in Nantwich.

Joel Bamford, executive director for mergers at the CMA, wrote that measures put forward by the companies represented "as comprehensive a solution as is reasonable and practicable".

The firms expect to fully merge operations within 18 months, with efficiencies and cost savings due after three years.

These could net £90m a year, but with a one-off restructuring cost of about £73m.

Overlapping roles are expected to be cut, which could lead to the loss of about 10% of jobs across the combined business.

Barratt chief executive David Thomas, said: "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.

"Our focus now is on integrating our businesses as efficiently and effectively as we can to deliver the expected benefits."