Barratt Developments has agreed to buy rival housebuilder Redrow in a £2.5 billion deal, which could lead to the loss of 10% of the combined workforce
The merger of two major housebuilders, Barratt Developments and Redrow, could put over 800 jobs at risk.
The £2.5 billion deal will create the UK’s largest housebuilder, Barratt Redrow, but may also lead to job losses as the firms aim to cut costs by closing overlapping offices and roles. According to their latest annual reports, housebuilding giants Barratt and Redrow could see as many as 890 jobs impacted due to their merger.
Barratt employed about 6,730 workers at the end of 2023 financial year, and Redrow had around 2,200. The job cuts would primarily affect overlapping positions in central and support functions, while aiming to “retain the best talent”.
Jobs based on building sites or sales offices should be safe, as those operations will continue as usual. Some job reduction is likely from natural attrition which simply means when people decide to leave a company and aren’t replaced. The bosses didn’t comment on potential job losses, but it’s no secret that Barratt initiated a recruitment freeze last fall, reducing headcount by 6% to rein in costs.
This merger is expected to lead to yearly savings of at least £90 million with an initial cost of approximately £73 million. Despite the shake-up, all employees are touted to benefit from more development opportunities and be part of an “industry-leading homebuilder with an industry-leading employee reward programme”.
Chief executive officer of FTSE 100-listed Barratt, David Thomas expressed “great respect” for Redrow. “This is an exciting opportunity to bring together two highly complementary companies, creating an exceptional homebuilder in terms of quality, service and sustainability, able to build more of the high-quality homes this country needs,” he said.
Matthew Pratt, Redrow’s boss, added that the merger will create a “leading UK homebuilder” and leave both businesses “in a much better position to offer a broader range of high-quality and energy-efficient homes” to buyers. The firms highlighted the significant shortage of homes in the UK as a backdrop to their decision.
However, before the merger can go ahead, it must first be approved by shareholders and the financial regulator. While Barratt’s shares were down by 8% at early afternoon on Wednesday, Redrow’s soared by 13%.
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