Barratt Developments & Redrow Combine in £2.5bn Deal
Leading construction company Barratt Developments plc has announced a recommended combination with Redrow plc, creating Barratt Redrow plc. The £2.5bn deal brings together three highly respected brands — Barratt, David Wilson, and Redrow — offering a variety of new homes to best serve communities around the UK.
“This is an exciting opportunity to bring together two highly complementary companies, creating an exceptional homebuilder in terms of quality, service and sustainability, able to build more of the high-quality homes this country needs,” shares David Thomas, CEO of Barratt Developments PLC.
Thomas joined the company in 2009 as Group Finance Director, and became CEO in 2015. Previously he held financial management roles at companies including The GAME Group, Millennium & Copthorne Hotels and House of Fraser. He gained his degree in Hotel, Motel and Restaurant Management from the University of Strathclyde.
Improved housing in the UK
Barratt was founded in 1952 when Sir Lawrie Barratt, an accountant, built himself a house instead of buying one, the success of which led to the formation of the company. In the over 70 years since, the company developed a reputation for nurturing and investing in brands that join the Group, including David Wilson which was bought in 2007. Since then, the brand has grown from 26 % to 34% of Barratt completions as service and quality has improved.
“As with Barratt, Redrow's fifty-year success story is based on its people, products and supply chain partners,” says Matthew Pratt, CEO of Redrow plc. Pratt joined Redrow in 2003 as Chief Quantity Surveyor, moving up the ranks to join the board as Chief Operating Officer in 2019, before becoming CEO in 2020. Pratt trained as a quantity surveyor and graduated with a degree in Construction from Nottingham Trent University.
“Together, we’ll be in a much better position to offer a broader range of high-quality and energy efficient homes to customers.”
The anticipated completion date of the combination is H2 CY24, when the Group will roll out its three brand strategy:
- Barratt Homes will offer value homes for first time buyers and families
- David Wilson Homes will offer quality homes for mover-uppers and families
- Redrow will present the premium offering for premium purchasers and downsizers
Outside of the group, as the construction industry in the UK continues to face concerning stats and downsizing, Julie Palmer, Regional Managing Partner at leading business recovery, financial advisory and property services consultancy Begbies Traynor, shares insight on the move.
“Across the board, housebuilders have had to slash forecasts and cut costs but the inevitable evolution of this was always going to be more consolidation and we have seen that in the £2.5bn deal Barratt has struck with smaller rival Redrow. At such a premium, Barratt is demonstrating its ambition and confidence in its future success,” she says.
“For now, all eyes will stay fixed on the transaction, but with mortgage rates beginning to settle, housing affordability showing signs of modest improvements and the prospect of cuts to interest rates, there looks to be light at the end of the tunnel.
“While the backdrop isn’t going to improve overnight, if Barratt can get this deal over the line, deliver synergies and lay the groundwork for a stronger performance, it could be a winner at the end of all of this.”
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