Housebuilder Barratt Developments has announced its agreement to acquire smaller peer Redrow in a deal valued at over £7.15 billion ($9.01 billion). The combined company will have a market value of GBP7.15 billion.
Under the terms of the agreement, shareholders of Redrow will receive 1.44 new Barratt shares for each share held, amounting to a premium of 27% over Redrow's closing price on Tuesday. This values Redrow at GBP2.52 billion.
Upon completion of the deal, Redrow shareholders will own 32.8% of the merged group, with Barratt shareholders owning the remaining stake. The combined board will consist of a mix of executives and non-executives from both companies, with Barratt's Chair, CEO, and CFO retaining their positions.
In fiscal 2023, the merged company, to be named Barratt Redrow, generated a total revenue of GBP7.45 billion and sold 22,642 homes. The board plans to maintain Barratt's existing dividend policy for the combined group, resulting in increased payouts for Redrow shareholders. Any excess cash will be returned to shareholders through share buybacks or special dividends.
The merger is expected to be completed in the second half of this year.
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