21st Aug 2024 09:00
(Alliance News) - Barratt Developments PLC acquisition of smaller housebuilding peer Redrow PLC moved toward completion on Wednesday, as the UK regulator confirmed it is likely to accept the steps the two companies have offered to take to address competition concerns.
Leicestershire-based Barratt struck the GBP2.52 billion deal with Flintshire, Wales-based Redrow in February.
The merger then came under scrutiny from the UK's Competition & Market Authority, which launched a Phase 1 investigation in March.
Earlier this month, the CMA stopped short of pursuing a Phase 2 investigation after concluding that the combination only has a "high combined share" in just one local area of the country, which is Whitchurch, Shropshire.
The CMA said the deal does not raise UK-wide competition concerns.
To remove uncertainties, Barratt decided to waive the CMA condition, allowing the combination to proceed.
On Wednesday, the CMA said it "considers that there are reasonable grounds for believing that the undertakings offered by the parties, or a modified version of them, might be accepted by the CMA to remedy the substantial lessening of competition identified by the CMA".
The regulator has until October 18 to decide whether to accept the mitigations proposed by Barratt and Redrow. In the meantime, on Tuesday it served an initial enforcement order to the two companies, allowing the CMA to order the merger to be unwound if its conditions aren't met.
Barratt confirmed that Wednesday will be the last day of dealings in Redrow shares.
Polar Capital Global Financials Trust PLC will replace Redrow in the FTSE 250 index on Thursday, index provider FTSE Russell said on Monday.
The new merged housebuilder will be call Barratt Redrow PLC and will take Barratt's existing position in the FTSE 100.
Barratt shares were up 0.2% at 550.20 pence early Wednesday in London. Redrow shares were up 0.4% at 791.00p.
Redrow shareholders will receive 1.44 Barratt shares for each Redrow share, valuing the Redrow shares at the current Barratt price at 792.29p.
By Tom Waite, Alliance News editor
Comments and questions to [email protected]
Copyright 2024 Alliance News Ltd. All Rights Reserved.