Barratt strikes £2.5bn deal to acquire rival Redrow

The news comes amid a sharp drop in new homes sales as house builders have been hit by softening demand among buyers due to higher mortgage rates.

Last summer, Redrow announced it would shut two of its 14 regional divisions as part of a restructure after falling sales.

Barratt and Redrow said today that they expect annual cost savings of around £90m as a result of the deal. 

David Thomas, chief executive of Barratt, who will lead the new group, said: “This is an exciting opportunity to bring together two highly complementary companies, creating an exceptional home builder in terms of quality, service and sustainability, able to build more of the high-quality homes this country needs.”

Matthew Pratt, chief executive of Redrow, added: “Both businesses are a great fit and there are many exciting opportunities to innovate and share knowledge across a range of different areas.”

Steve Morgan, founder and still the largest shareholder at Redrow, has also backed the tie-up. 

The deal is expected to close in the second half of 2024, but remains subject to approval from shareholders. 

The announcement comes as Barratt reported an 81% drop in half-year pre-tax profit to £95m, partly due to £62m of “legacy” costs related to tackling building safety. 

Barratt, along with Redrow, are among 54 developers that have signed the government’s remediation contract, which commits them to fixing “life-critical” fire safety defects on buildings 11 metres or taller that they had built in the past 30 years.