Housebuilding merger probed by regulators

THE planned tie-up of two of Britain’s biggest housebuilders is being pored over by regulators.

The Competition and Markets Authority (CMA) has launched an investigation into Barratt Development’s proposed takeover of smaller rival Redrow for £2.5bn.

The companies agreed to merge last month in a deal that would create a group – called Barratt Redrow – which could build 23,000 homes a year.

But the CMA said it was considering whether the deal would significantly reduce competition in the industry – and in turn drive up prices.

The watchdog has the power to block the merger or enforce changes to address its concerns once it has investigated the potential risks.

But shares in the companies were little changed – Barratt shares fell 0.7pc and Redrow slid 1.3pc – in a sign that investors believe the deal will still go though.

Russ Mould, investment director at investment platform AJ Bell, said: ‘news that the competition watchdog is looking into [the] acquisition 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.’ The interest in the deal comes amid a wider CMA investigation into the housebuilding industry.

The regulator is probing eight housebuilders, including Barratt and Redrow, amid fears they may be sharing commercially sensitive information.

CMA chief executive Sarah Cardell has said: ‘Housebuilding in great Britain needs significant intervention.’