The consolidation of the house building industry will gain fresh impetus today when George Wimpey and Taylor Woodrow announce plans for a £6 billion nil-premium merger.

The all-share deal, the latest in a series of transactions in the sector, will propel the enlarged company into the FTSE 100 index and allow it to leapfrog Barratt Developments as Britain's biggest housebuilder.

The management of the merged business, likely to be called Taylor Wimpey, will be dominated by Wimpey.

Peter Redfern and Andrew Carr-Locke, respectively chief executive and finance director of Wimpey, will retain those roles, while the chairman's job will be taken by Norman Askew, from Taylor Woodrow.

Mr Redfern, 36, would become one fo the youngest FTSE 100 chief executives.

Ian Smith, who joined Taylor Woodrow in January from General Healthcare as chief executive on a salary of £610,000, is expected to receive more than £1 million.

The merger is expected to generate cost savings and other synergies of between £50 million and £60 million, with estimated job losses of about 1,000 from the combined workforce of 14,000.

At Friday’s close of 420½p, Taylor Woodrow has a market value of £2.47 billion. Wimpey’s price of 635p gives a £2.55 billion capitalisation.

Including net debt, the enterprise value of the merged company would be about £5.8 billion, although that should rise when the market opens this morning.

Combined revenue will be more than £6.8 billion, while pre-tax profits will be about £716 million. Between them the two companies will build more than 30,000 homes this year.

Last year, Wimpey, which owns Laing Homes, built 17,963 homes, of which 13,616 were in Britain. Taylor Woodrow, which owns Bryant Homes, completed 13,165 - 8,294 of them in the UK.

The merger, long tipped by analysts as an ideal marriage, is the latest in a string of deals in the sector. This month Crest Nicholson was sold to a consortium led by Sir Tom Hunter, the Scottish tycoon, in a deal worth £715 million. In February Barratt Developments announced a £2.2 billion takeover of Wilson Bowden, after outbidding Wimpey.

Persimmon, which last year swallowed Westbury, is being tipped as a contender to gatecrash today’s merger by bidding for one of the companies. However, it may be put off by their exposure to the slowing American housing market.

One source said: “Both Taylor Woodrow and Wimpey have US businesses, which makes them a natural fit. By joining forces, they will be able to cut their costs in America. If Persimmon bids for one of them, it would probably have to spin the US business off.”

In the UK, housebuilders have been buoyed by the continuing rise in house prices on the back of high employment and low interest rates. With demand outstripping supply, firms with strong landbanks have been in the bid spotlight.

Foundations

—Taylor Woodrow was founded in 1921 when 16-year-old Frank Taylor borrowed £100 to build two working-class homes in Blackpool. As he was too young to form his own company, his uncle Jack Woodrow lent his name to the business. It has operated in North America since 1936

—In 1880 George Wimpey established a stone-working business in Hammersmith, West London. In 1919 G. W. Mitchell purchased the company and expanded from road contracting into housebuilding. It acquired Morrison Homes in America in 1984

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