In its first trading update since the merger, Barratt Redrow is beginning to experience “more stable markets conditions”.
Barratt acquired its smaller rival Redrow as part of a merger worth £2.5 billion announced in February. The deal was approved by the competition authorities early in October.
In 2025, the deal will create a new developer that is expected to build between 16,600-17,200 homes. David Thomas, chief executive of the group, stated that the combined entity is “well-positioned” in its first trading report to meet the rising demand for housing.
Thomas said: “While customer demand is still sensitive to the economy as a whole, we’re beginning to see more stability in market conditions due to increased mortgage affordability and availability.
The solid trading in recent weeks has encouraged us.
Housing group is consulting on the possibility of closing five offices in order to save £90mn after acquisition. The executive team is assessing the supply chain of the combined group to save £34 million on procurement. Office closures may also help to save £33 millions. Both companies will also share their central and support services, which could result in savings of £23 million.
Anthony Codling is an analyst at RBC Capital. He said that the acquisition was a bit drawn out but timing is important. Barratt now has the keys to Redrow just as the UK housing cycle is about to inflection. The government is supporting the sector, and the trajectory for planning, wages, and mortgage rates are a help and not a hindrance.
In the next few years, the company plans to open 45 sales outlets on site. Redrow is set to expand throughout the UK and bring new housing layouts into regional markets that Barratt already serves. The group’s combined forward order books totalled 10,619 homes as of October 13th. Barratt Redrow’s landbank consists of 88,880 lots, representing a five-year supply pipeline.
The shares of the company closed at 485 1/4p, up by 12p or 2.5 percent.
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