1st Oct 2019 09:51
(Alliance News) - Severfield PLC said Tuesday it acquired fellow structural steel firm Harry Peers & Co Ltd for up to GBP25 million in cash.
"This acquisition will help Severfield continue to deliver on its strategic objectives," Chief Executive Officer Alan Dunsmore said. "Harry Peers's experience in specialist, highly regulated, non-cyclical markets will enhance our future growth plans through expanding the group's capabilities and sector reach."
Harry Peers delivers structural steel for the defence and civil nuclear industry as well as the process and power generation sectors.
"We believe Severfield is best placed to help Harry Peers continue its profitable growth trajectory, through increased scale and investment and together with Harry Peers's strong management team we have a real opportunity to develop a broader position within the UK structural steel services market", Dunsmore added.
Under the deal, Severfield will pay an initial GBP18.0 million in cash on completion. A further GBP7.0 million deferred consideration could be payable on the achievement of agreed financial and operational targets up to August 2020.
The acquisition will be funded with existing cash and debt reserves.
For the year ended April, Harry Peers generated GBP3.4 million in pretax profit on revenue of GBP21.2 million the year prior. In contrast, Severfield itself generated GBP24.7 million pretax profit on revenue of GBP274.9 million for the year that ended in March.
Severfield expects the purchase to be earnings enhancing from the first full year of ownership.
Shares in Severfield were flat at 71.10 pence in London on Tuesday.
By Ahren Lester; [email protected]
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