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2020 / 2021 Edition

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Breedon to acquire certain CEMEX UK assets

Pat Ward

Acquisition set to enhance Breedon’s position as a leading construction materials group in GB and Ireland

BREEDON Group plc have entered into a conditional agreement with CEMEX UK Operations Ltd to acquire certain assets and operations in the UK for a total consideration of £178 million on a cash and debt-free basis.

The active assets being acquired consist of 49 ready-mixed concrete plants, 28 aggregate quarries, four depots, one cement terminal, 14 asphalt plants and four concrete products operations, located in Scotland, Wales, north-east England, Norfolk, the East Midlands and Yorkshire.

Part of CEMEX’s Paving Solutions business in the UK, together with some inactive sites, are also included in the sale.

Breedon will acquire the assets for £155 million in cash, payable on completion, together with the assumption of £23 million of lease liabilities. The cash consideration will be financed by Breedon’s existing £350 million revolving credit facility and drawdown of £80 million through exercise of the accordion option agreed at the time of the Group’s most recent refinancing.

In the year ended 31 December 2018, CEMEX’s UK assets generated revenue of £178 million and EBITDA of £23 million.

Breedon say they expect to achieve annual net pre-tax cost synergies of approximately £2 million by the third full year following completion, which is expected to take place in in the second quarter of 2020, subject to completion of a TUPE consultation process.

As a result of the acquisition, Breedon’s mineral reserves and resources will increase by approximately 170 million tonnes, enough to last more than 27 years at current extraction rates.

Pat Ward (pictured), Breedon’s group chief executive, commented: ‘This is a unique opportunity to extend our national network through a single value-enhancing transaction, substantially increasing our footprint in several regions of Great Britain where we are currently under-represented and adding approximately 170 million tonnes of mineral reserves and resources. It also delivers a step-change in the development of our national asphalt strategy.

‘There is potential to drive significant performance improvements across these new assets and they will also strengthen our platform for further organic growth and bolt-on acquisitions.

‘In addition to the cost synergies we anticipate, we also expect the deal to be accretive to both earnings and free cash flow in the first full year, with a positive ongoing impact on the cash generation of the enlarged Group.’

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