Single building site in Shropshire could scupper big builders’ merger

The future of Barratt’s huge merger deal with fellow housebuilder Redrow could depend on investigations into a single development.

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

Investigation

The development in Whitchurch (main picture), brings into focus the market in nearby towns such as Nantwich, Ellesmere and Market Drayton.

Having concluded a detailed first phase investigation into the deal, the CMA found issues in this one local area.

The CMA says 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.

Higher prices

If the deal goes ahead, the CMA said that it could lead to higher prices and lower quality homes in this area.

However, the CMA found that once the deal is complete, the merged business will continue to face competition from rivals nationally and in all other local areas.

Barratt and Redrow now have the opportunity to submit proposals which address the CMA’s concerns in the local area around the Whitchurch development, to avoid the deal moving to an in-depth second phase.

Prospective homebuyers must not be disadvantaged as a result of deals like this one.”

Joel Bamford, Executive Director for Mergers at the CMA, says: “Prospective homebuyers must not be disadvantaged as a result of deals like this one – with the potential loss of competition leading to even higher house prices or lower quality homes.

“Our initial investigation found concerns specifically in one area in and around Whitchurch, the companies now have the opportunity to agree workable solutions which address our concerns rather than move to a more in-depth investigation.”