18th Nov 2015 07:58
LONDON (Alliance News) - Breedon Aggregates Ltd on Wednesday said it has continued to trade well and that earnings for the full year will come in at the top end of market expectations, as it struck a GBP336.0 million deal to buy Hope Construction Materials Ltd.
Breedon said it has entered into a deal with Cortolina Investments Sarl to buy Hope for GBP336.0 million in cash and shares. It will pay the GBP202.0 million cash consideration through a new GBP300.0 million revolving credit facility and through a GBP41.0 million equity placing.
The other GBP134.0 million will be satisfied through the issue of 259.1 million Breedon shares at 51.79 pence per share. Breedon shares closed at 60.375p on Tuesday.
Breedon said the deal will create the largest independent building materials company in the UK. Hope has more than 160 operational sites in the country, including five quarries, 152 concrete plants and a cement works in Derbyshire. Hope generating underlying earnings before interest, taxation, depreciation and amortisation of GBP37.0 million for the year to the end of June, on revenue of GBP285.6 million.
The deal will provide Breedon with a presence in the cement market and will boost its geographic footprint. It expects to deliver cost synergies of GBP10.0 million a year from the deal.
The aggregates company said product volumes in the first ten months of 2015 were higher year-on-year, driven by strong underlying trading conditions in England, while the Scottish market, though still subdued, is set to get a boost from new contracts due to feed through and run through 2016 and into 2017.
For the ten months to the end of October, Breedon sales volumes for aggregates rose 19%, with asphalt sales volumes up 23% and concrete up 20%. Revenue for the period was up 22% to around GBP274.0 million, and the group has benefited from lower energy costs.
Breedon said, assuming weather conditions remain favourable, underlying earnings before interest, taxation, depreciation and amortisation should be at the top end of market expectations for 2015.
By Sam Unsted; [email protected]; @SamUAtAlliance
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