February 22, 2024 | Real Estate | Europe | Active

Redrow / Barratt Developments: Deal Insigth

Barratt Developments, the UK’s largest homebuilder, has entered into a definitive agreement to acquire its smaller rival, Redrow, in a £2.5bn all-share deal, aiming to bolster its position and capitalise on the anticipated long-term recovery in the UK housing market. Per the companies’ Rule 2.7 announcement made on 7-Feb-24, Redrow shareholders will receive 1.44 new Barratt shares for each Redrow share, and based on the previous day’s closing prices, this implies a value of 763p per Redrow share and a 27.2% one-day takeover premium. Both merger parties’ boards unanimously intend to recommend the deal to their respective shareholders, and upon closing, Barratt shareholders will own 67.2% of the combined company, with Redrow shareholders owning the remaining 32.8%. The merger is structured as a UK scheme of arrangement, whereby at least 75% in value of Redrow shares must approve the scheme at the court meeting, and 75% of those in attendance must approve at an EGM. As well, the relative sizes of the companies makes this a Class 1 transaction, meaning that 50% of Barratt shareholders need to vote at a separate EGM. Regulatory conditions include approval from the UK CMA, where Barratt has committed under the Cooperation Agreement to exert all reasonable efforts to secure approval from the antitrust regulator. The scheme document will be released “in due course,” with the companies noting that the Takeover Panel has granted an extension of the deadline for its posting. The document will be published concurrently with a Barratt shareholder circular and prospectus, both of which require approval from the FCA. The companies anticipate that the three will be published by mid-April 2024, with shareholder meetings scheduled for ...

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