- Firms stick to deal schedule
- Barratt waives CMA concern
- Market sentiment improving
Housebuilder Barratt Developments (BDEV) announced it would finalise the acquisition of smaller rival Redrow (RDW) and form a new company, Barratt Redrow, by the end of this week in spite of regulatory concerns.
Barratt shares gained 6p or 1.2% to 542p while Redrow shares gained 20p or 2.6% to 780p.
MERGER ON TRACK
The two developers revealed in February they had agreed terms on an all-share merger subject to approval by shareholders and the CMA (Competition and Markets Authority).
Having looked into the deal, the CMA said earlier this month it hadn’t found any nationwide competition issues which could block the merger but it had identified one local area out of 400 where the two companies overlapped, with just 10 plots left to sell.
Barratt and Redrow have engaged with the CMA in order to avoid a fuller investigation and today Barratt said it had waived the CMA condition meaning the combination of the two businesses can carry on as scheduled.
‘This removes uncertainty for the employees, supply chain and wider stakeholder groups of both businesses, and allows us to accelerate the creation of an exceptional UK homebuilder in terms of quality, service and sustainability, which in turn can accelerate the delivery of high-quality, sustainable homes and communities for customers across the UK, addressing the country’s need for homes,’ said the firm.
Note to investors: The last day of dealings in and for the registration and transfer of Redrow shares will be 21 August 2024 when the scheme is expected to become effective.
BUYER ENQUIRIES RISING
Adding to positivity around the sector, housing portal Rightmove (RMV) today raised its forecast for average selling prices from a fall of 1% to a rise of 1% due to ‘positive market data and trends’.
The number of sales being agreed is now 16% ahead of the near-peak-mortgage-rate period of a year ago, while the number of new sellers coming to market is up 5% on last year as confidence continues to grow.
At the same time, the number of potential buyers contacting estate agents about homes for sale has jumped from 11% in July to 19% so far this month.
‘The first bank rate cut since 2020 has sparked a welcome late summer boost in buyer activity,’ said Tim Bannister, Rightmove’s director of property science.
‘While mortgage rates aren’t yet substantially lower since the rate cut, the fact that the long-hoped-for first cut has finally arrived, and mortgage rates are heading downwards, is positive for home-mover sentiment. As the summer holiday season comes to an end, the conditions are there for a more active autumn market,’ added Bannister.
