Already listed among the UK’s top-10 housebuilders, Barratt Developments and Redrow have agreed to a £2.5bn all-stock merger deal that will create a single company – Barratt Redrow. This move coincides with the challenges both companies – and the sector in general – have been facing due to a severe downturn in the sale of newly built homes.
Significant cost savings, increased revenue
Coalville-based Barratt Developments estimates that the deal will bring annual cost savings of £90mn by the end of the third year, an important factor if they are to survive the current market situation and continue to meet UK housing needs.
By becoming the nation’s largest housebuilder, they aim to create a business model that will be better equipped to face market challenges such as the dip in property values seen in the second half of 2023 and fewer sales caused by higher mortgage rates.
The deal is also likely to bring a combined revenue of £7.5bn.
Increase in house completions
Redrow’s founder and largest stakeholder Steve Morgan anticipates the larger group will “accelerate the delivery of much-needed homes across the UK”.
Based on the previous performance of the two companies, Barratt Redrow anticipates building approximately 22,600 new homes annually in the medium term. This equates to a 57-63% increase on Barratt’s projections alone for 2024.
Barratt’s CEO David Thomas, who will head up the combined company, states that "despite the challenging macroeconomic backdrop, underlying demand for our homes is strong.
"Since the start of January, we have seen early signs of improvement in both reservation rates and buyer sentiment, helped by expectations of lower interest rates and the introduction of more competitive mortgage rates."
Wider housing portfolio
With three complementary housing brands – Barratt, David Wilson Homes and Redrow - the new company will also expand its portfolio of housing, with the Redrow brand focusing on larger, higher-quality homes.
A bellwether of future mergers?
If market trends continue, is it possible we will see even more mergers as companies strive to weather the storm by cutting costs and running a tighter ship?
Barratt uses MuckStopper to protect drains
Barratt Developments has long since adopted the MuckStopper products from Drainfast as a means of preventing silt and debris on construction sites from entering manholes, inspection chambers and road gullies.
Blockages during construction will negatively impact the profitability of a housing project as it costs time, money and disruption to clear them. Drainfast developed the MuckStopper range to capture silt and debris as it enters the chamber while allowing clear water to filter through into the drains.
MuckStopper products are simple to install temporarily, easily emptied to maintain clear drains and can be redeployed time and again on multiple sites to maximise their cost efficiency.
Read this case study to see the benefits that using MuckStopper has brought to Barratt – we are certain that as the new combined company continues to grow, they will be expanding their use of MuckStopper products to drive down operational costs and manage more efficient construction sites.
Drainfast delivers drainage products across the UK
MuckStopper isn’t the only product we have developed. Take for example our SiteStak system, designed to provide safe, organised and clean storage areas and workstations for drainage materials on any construction site.
We also stock a wide range of drainage products and accessories in our three depots and deliver them across the UK with our branded fleet of vehicles.
Whatever the size of your company, if you’d like to discuss Drainfast products and services call our friendly team on 01420 555600 or email [email protected].
As Marketing Manager, Mark plays an active role in running strategic projects to increase our brand profile.