Competition watchdog to probe proposed Barratt-Redrow merger

Redrow Heritage Collection homes

The proposed merger between North West housebuilder Redrow and Leicestershire housing giant Barratt, is to be investigated by the competition watchdog.

The Competition and Markets Authority (CMA) announced today (March 15) that it will look into the merger amid fears that it might reduce competition in the industry.

The CMA has issued a preliminary ‘invitation to comment’ to allow interested parties to submit any initial views on the impact that the transaction could have on competition in the UK.

This invitation to comment is the first part of the CMA’s information-gathering process, in advance of the CMA’s formal investigation starting.

It said it may proactively contact companies and organisations that are active in the markets affected by the merger, or have valuable insights or evidence that could assist the CMA’s investigation.

Redrow’s shares were trading slightly up on today’s opening price of 660p by mid-morning, while Barratt’s was steady at its 475p opening price.

Russ Mould, investment director at Manchester investment platform, AJ Bell, said: “News that the competition watchdog is looking into Barratt’s planned acquisition of Redrow hasn’t troubled the markets.

“It’s only natural to look into a deal involving two key names, but the muted share price reaction suggests that any potential remedies to get the deal over the line might be small. Redrow is a well known name in the housebuilding sector, but it isn’t a top tier player.”

The two housebuilders are part of another CMA investigation after the regulator announced in late February that it was looking at eight companies after a study of the UK residential building market suggested possible information sharing between the rival firms.

The probe involves Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow, Taylor Wimpey, and Vistry.