The Daily Telegraph - Saturday
Housebuilders’ £2.5bn merger faces inquiry
THE competition watchdog has launched an investigation into Barratt’s £2.5bn deal to buy rival Redrow.
An agreement between two of Britain’s biggest housebuilders was struck last month, as the pair said the combined company will have capacity to build 22,000 homes a year.
However, the Competition and Markets Authority (CMA) has revealed it is investigating the takeover amid fears it could result “in a substantial lessening of competition”.
Both companies are now facing two separate inquiries by the regulator after the CMA last month opened an investigation into suspected illegal information sharing between developers.
Regulators said possible collusion in the industry could have pushed up prices, with the investigation looking into Barratt, Bellway, Berkeley, Bloor Homes, Persimmon, Redrow, Taylor Wimpey and Vistry.
The CMA confirmed yesterday that it had issued an invitation for evidence on Barratt’s proposed takeover of Redrow.
Interested parties will have until April 2 to submit comments before the regulator starts the next phase of its inquiry.
After announcing the merger plans last month, David Thomas, the Barratt chief executive, warned that Britain is not building enough properties to meet demand.
The Government has set a target for 300,000 new homes to be built each year, but this has repeatedly been missed. Overall completions fell by 8pc to 231,000 last year.
Matthew Pratt, the Redrow chief executive, said the deal “is an opportunity to meet the current challenges faced by the house building sector”.
Barratt’s merger with Redrow will allow the two companies to limit the impact of higher rates by building a wider range of houses on plots they jointly own.
The latest investigation comes as Berkeley said yesterday that house sales continue to decline, but it is hopeful of a resurgence as interest rates fall.
It said it expects to make £1.5bn of pre-tax profits over the next three years, of which £550m is forecast for the last financial year.
Both Barratt and Redrow were contacted for comment.