Housebuilder Barratt Developments has agreed a £2.5billion deal to buy rival Redrow, claiming the combined company would "accelerate the delivery of the homes this country needs".
The financial terms of the all-share combination, being unanimously recommended by Redrow's board, represent a premium of approximately 27.2% to Redrow investors, a statement said this morning.
The valuation was based on the closing price for Redrow shares on Tuesday.
Each Redrow shareholder will get 1.44 new Barratt shares for each Redrow share under the deal.
It would result in them owning almost a third of the new company, which is to be called Barratt Redrow.
The announcement was accompanied by a financial update from Barratt this morning, which showed its profits before tax were £95.2million, down from £501.5m in the same period the year before.
Commenting on the interim results David Thomas, Chief Executive of Barratt Developments said: "Whilst our operating environment is still challenging, Barratt has remained focused on delivering high-quality, energy-efficient and well-designed homes across the country. We continue to lead the industry in customer service, build quality and sustainability.
"During the period, we have been rigorous in carefully controlling our build activity, managing our costs, being highly selective in land buying, and driving revenue. These clear priorities have helped maintain the strength of our balance sheet despite lower levels of profitability and ensure we remain resilient and responsive through the cycle.
"Despite the challenging macroeconomic backdrop, underlying demand for our homes is strong. Since the start of January, we have seen early signs of improvement in both reservation rates and buyer sentiment, helped by expectations of lower interest rates and the introduction of more competitive mortgage rates. I would like to thank everybody at Barratt, our sub-contractors and our suppliers for their commitment and hard work as we continue to deliver for our customers, stakeholders and shareholders."
FTSE100
The UK's flagship share index, the FTSE 100, was down three-points at 7,677 shortly after opening this morning.
Brent crude oil futures was up 0.28% today, trading at $78.81 a barrel.
Companies reporting today
| Alibaba | Q3 Results |
| Ashmore | Half Year Results |
| Barratt Developments | Half Year Results |
| DCC | Interim Management Statement |
| PZ Cussons | Half Year Results |
| Smurfit Kappa | Full Year Results |
| UK Commercial Property REIT | Q4 Net Asset Value Statement |
| Walt Disney Co | Q1 Results |