The merger of housebuilders Barratt Developments and rival Redrow could lead to the loss of more of 800 jobs, as two of the country’s biggest developers come together to save money and build more homes.
Barratt said it has agreed to buy Redrow in a deal worth £2.5 billion.
The combined company, which is set to be renamed as Barratt Redrow, will create the UK’s largest housebuilder and accelerate the building of “much-needed” homes, according to the announcement.
However, the tie-up could lead to job losses as the firms look to cut overlapping roles and consolidate office space.
Barratt said it will consider whether there are offices in similar locations and if it could save on rental costs.
This review could lead to the closure of around nine offices, according to the group’s preliminary analysis. Barratt currently has 29 offices and Redrow has 12 across the country.
It also said that restructuring could lead to the loss of about 10% of full-time employees across the combined business.
“This could lead, subject to a review of the requirements of the combined group after completion and any applicable informing and consulting requirements, to a reduction in the total number of employees by circa 10% of the combined group’s total number of employees (on a full-time equivalent basis),” the announcement read.
According to their latest annual reports, Barratt employed about 6,730 staff at the end of 2023 financial year, and Redrow had around 2,200, meaning there could be as many as 890 jobs affected by the merger.
This would largely come from overlapping jobs between both firms’ central and support functions, with the group looking to “retain the best talent”.
It is not expected to affect staff based in building sites or sales offices as they will continue to be run in a similar way.
Some of the reduction is expected to occur through natural attrition – meaning when people choose to leave a company and their role is not replaced.
Barratt did not provide a comment on the possible job losses.
Barratt had already implemented a recruitment freeze which it said reduced its headcount by 6% from October 2022 to June 2023, as part of efforts to control costs.
The tie-up is expected to lead to cost savings of at least £90 million a year, with a one-off cost of making these savings of about £73 million.
All employees will benefit from greater opportunities for development and being part of an “industry-leading homebuilder with an industry-leading employee reward programme”, Barratt said.
David Thomas, chief executive of FTSE 100-listed Barratt, said the business has “great respect” for its competitor.
“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.
Redrow’s boss, Matthew Pratt, said 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.
It comes amid a backdrop of a significant shortage of homes in the UK, the firms said.
The deal must first be approved by shareholders and the financial regulator before the merger can go ahead.
Shares in Barratt were down by 8% at early afternoon on Wednesday, but Redrow’s soared by 13%.