The deadline for the Competition and Markets Authority (CMA)’s phase-1 investigation into the proposed £2.5 billion merger between housebuilders Barratt Developments PLC (LSE:BDEV) and Redrow PLC (LSE:RDW) closes this Thursday.
The proposed merger was first announced in February before the CMA opened an investigation into the deal in March, followed by an official competition inquiry in June.
Combined, the two firms would build about 23,000 homes a year and make more than £7 billion in revenue.
Barratt believes the combined group can achieve annual pre-tax cost synergies of at least £90 million by the end of the third year following completion, with approximately 90% expected to be delivered by the end of the second year.
But the CMA is looking to determine if the combination “may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services”.
Bellway must table offer or walk away
Thursday also sees another important deadline in the housebuilding sector.
Bellway PLC (LSE:BWY) must table a formal offer for housebuilder Crest Nicholson PLC (LSE:CRST) after approaching its rival with a revised £700 million takeover deal in June.
Crest Nicholson has suggested it is open to the merger, with directors stating in July that the revised offer is “at a value that it would be minded to recommend unanimously” to its shareholders.
The flurry of merger proposals come at a turning point for the housebuilding sector.
Keir Starmer’s Labour Party has pledged to build 1.5 million new homes over the next five years.
This has led to a bullish repricing of housebuilding shares.
Barratt is up 6.5%, Redrow 6.4% and Bellway 2.2%, although Crest Nicholson has remained flat.