Breedon Group acquire Sherburn Minerals
Group enters binding agreement to acquire leading independent heavyside business for £15.7 million
BREEDON, the UK’s largest independent construction materials group, have entered into a binding agreement to acquire the Sherburn Minerals Group for a total consideration of up to £15.7 million.
Sherburn, a leading independent heavyside building materials business headquartered in Co. Durham, employ approximately 110 people. The company operates four quarries and five ready-mixed concrete plants in Co. Durham, Northumberland, North Yorkshire and Cumbria. It also distributes cementitious products from two import terminals at Blyth, near Newcastle, and Dundee in eastern Scotland.
Sherburn reported an underlying EBITDA of £1.8 million on revenues of £16.1 million in the year to 31 March 2016. The company has in excess of 21 million tonnes of mineral reserves and resources, together with significant cement storage capacity at its two terminals.
The purchase price will be satisfied by the payment of £9.5 million in cash, funded from Breedon Group’s existing resources, together with the assumption of £6.0 million of debt. A further conditional payment of £0.2 million will be payable one year after completion.
Following completion of the acquisition, Paul Allison, Sherburn’s current managing director and a minority shareholder, will remain with the business as a consultant.
Commenting on the acquisition, Pat Ward, Breedon’s chief executive, said: ‘Following our acquisition of Hope earlier this year, which significantly expanded our geographical footprint in the north of England, Sherburn is a perfect infill acquisition for us. It gives us additional mineral reserves and access to new markets for our aggregates and concrete, as well as a first-rate workforce.
‘It also complements our existing cement plant at Hope and will enable us to expand our cementitious business through the importation of cement and ground granulated blast-furnace slag (ggbs) through Sherburn’s two strategically located terminals in north-east England and eastern Scotland.’
Meanwhile, in a separate trading update issued today, Breedon have reported a strong performance in the 10 months to 31 October 2016. Both volumes and revenues in the former Breedon Aggregates business were ahead of the prior year, supplemented by a three-month contribution from the former Hope Construction Materials business.
Including Hope, Group sales volumes of aggregates increased by 25%, asphalt by 1% and concrete by 96%, while total Group revenue for the 10-month period increased by 31% to approximately £361 million.
Breedon say the integration of Hope is progressing well, with synergies coming through earlier than had previously been expected. Assuming that weather conditions remain favourable for the remainder of the financial year, the Group’s underlying EBIT for the full year is expected to be ahead of current market expectations at around £53 million.
Looking ahead, Breedon say they remain positive about the outlook for the industry. The company was encouraged by the Chancellor’s stated commitment last week to increase investment in national infrastructure, together with continued support for house building, both of which should have a beneficial impact on Breedon’s business in the medium term.
‘We have a number of projects already secured and under way for next year, and the continuing integration of Hope coupled with a full-year contribution from Sherburn is expected further to enhance our performance. We therefore remain confident of making continued progress in 2017,’ said chief executive Pat Ward.
Breedon’s preliminary results for the year ending 31 December 2016 will be announced on 8 March 2017.
