The mega housebuilder merger of Barratt and Redrow looks set to go ahead after getting a green light from the regulator.

The Competition and Markets Authority (CMA) had found that Barratt’s £2.5 billion deal to purchase rival Redrow Homes raised competition concerns in the local area around a single Barratt development in Shropshire.

But now the CMA has indicated its concerns have been alleviated, so it can give the deal the go-ahead, and Barratt appears to be progressing the deal anyway.

Market concerns

The development in Whitchurch (main picture) raised the issue about the market in nearby towns such as Nantwich, Ellesmere and Market Drayton.

The CMA said that both housebuilders currently hold “a high combined share of land” in the catchment area around the Barratt development, with the addition of Redrow’s development at Kingsbourne in Nantwich.

But it now says: “The CMA 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 under the Enterprise Act 2002.”

We view the CMA’s issue as a minor one that can be easily resolved.”

Anthony Codling, MD Equity Research, RBC Capital Markets, says: “It is good for Barratt, Redrow and homebuyers in general that Barratt has chosen to push ahead with its proposed merger with Redrow despite the small issue raised by the CMA.

“We view the CMA’s issue as a minor one that can be easily resolved and not an issue big enough to stand in the way of the planned combination of Barratt and Redrow,” he says.

“The sooner the merger is completed the sooner homebuyers can benefit from a larger choice of homes offered for sale by the newly formed combined group.”