FTSE Close: Barratt to acquire Redrow in all-share deal

Barratt buys Redrow in £2.5bn deal to become UK's dominant housebuilder; Sainsbury's outlines growth strategy but faces intense competition in struggling grocery market.

Mark Rogers

Mark Rogers

Barratt Developments shares fell 6.5% while Redrow surged 13% on Wednesday after the UK’s largest housebuilder announced it will acquire its smaller peer in an all-share takeover offer valuing Redrow at £2.52 billion. Each Redrow shareholder will receive 1.44 new Barratt shares for every Redrow share held. Following completion, Redrow shareholders will own around 33% of the combined Barratt Redrow plc, with Barratt shareholders holding the remaining 67%.

In other housebuilding sector news, Crest Nicholson added 4.4%, Bellway rose 2.8% and Taylor Wimpey shares climbed 1.2%

The broader UK stock market underperformed, with the FTSE 100 down 0.7%, weighed down by a 6.1% drop in Sainsbury’s shares. The grocer outlined its “next level Sainsbury’s” growth strategy focused on gaining UK grocery market share. It also committed to a progressive dividend policy from 2024 and a £500 million share buyback program.

Sainsbury’s said it will aim for £1 billion in cost savings over the next three years to fund the payouts, expecting to take £150 million in one-off costs over that period.

Elsewhere in the UK market, magazine publisher Future plc fell 7.7% as it cautioned of pressure on digital advertising and affiliate revenue to start 2023 amid the weak macro backdrop. Production firm Zinc Media bucked the negative trend, with shares climbing 3.1% after upbeat full-year revenue guidance.

FTSE All-Share Gainers

Redrow 15%, Cab Payments 7%, Palace Capital 6%, Darktrace 5%, Petrofac 4%, Crest Nicholson 4%, Bakkavor 4%, MJGleeson 4%, Gulf Marine Services 4%, Smurfit Kappa 4%.

FTSE All-Share Fallers

Pz Cussons -16%, Babcock -8.93%, Regional Reit -7.51%, Future -7.38%, Sainsbury’s -6.06%, Synthomer -5.99%, Schroders Cap -5.73%, Barratt Developments -5.47%, Superdry -5.31%, Speedy Hire -5.18%.

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