Barratt Developments and Redrow shares rose as merger moved closer

Barratt Developments (LSE:BDEV) shares closed Monday’s comfortably in positive territory, as its deal to buy Redrow (LSE:RDW) is expected to be completed later this week.

The £2.5 billion transaction is now advancing after Barratt announced that it would waive the conditions imposed by the UK’s Competition and Markets Authority (CMA).

Previously, the CMA raised concerns that the merger could reduce competition and potentially lead to higher prices in specific locations (namely Whitchurch and Shropshire) where both Barratt and Redrow hold significant land.

Barratt noted that this issue affects only one of the over 400 areas where the two companies operate.

The schedule anticipates that Redrow shares will be suspended on Thursday, and the enlarged version of Barratt will resume trading in London on Friday.

Albeit, the full integration cannot occur until the CMA's concerns are resolved, and, the CMA is likely to impose an Initial Enforcement Order, preventing the operational merger of the companies until appropriate measures are taken to address the identified issues.

Barratt is confident that it can resolve these concerns and finalize the merger, which is expected to result in the construction of around 23,000 homes per year and a combined turnover exceeding £7 billion.

Barratt stated that completing the deal will remove uncertainty for employees, suppliers, and other stakeholders, allowing the company to focus on delivering quality homes across the UK.

In London, Barratt shares gained 3.2% to end Monday’s session at 552.90p whilst Redrow was up 2.3% to 778.1p.