Breedon to acquire Lagan Group for £455 million
Company announces its largest acquisition to date with agreement to take over Northern Ireland-based Lagan Group
BREEDON have entered into a conditional agreement to acquire Belfast-based construction materials business Lagan Group (Holdings) Ltd for a cash consideration of £455 million.
Lagan, one of the leading suppliers of construction materials and contract surfacing in Ireland and the UK, operate a modern cement plant in Kinnegad, nine active quarries, 13 asphalt plants and nine ready-mixed concrete plants. In the year ended 31 December 2017, the business generated revenues of £249 million and EBITDA of £46 million.
The combination of Breedon and Lagan will create a leading independent construction materials group in the UK and Ireland, extending Breedon’s geographic footprint with immediate critical mass in Ireland and across the entire value chain.
The acquisition will also provide Breedon with an enhanced platform for further organic growth and bolt-on acquisitions, providing significant opportunities to expand upstream though the aggregates business in Ireland and downstream through the asphalt and ready-mixed concrete operations.
The consideration, payable upon completion, will be financed by a combination of a new £150 million term loan, a new £350 million revolving credit facility that replaces Breedon’s existing £300 million revolving facility and a £170 million equity placing.
Commenting on the acquisition, Peter Tom CBE, Breedon’s executive chairman, said: ‘We are delighted to have completed our largest acquisition to date and particularly pleased that it has been so strongly supported by our shareholders.
‘Over the last eight years we have pursued a successful buy-and-build strategy which has established Breedon as the largest independent construction materials business in the UK, and the acquisition of Lagan is another strategic step for us.
‘We believe it has the potential to add significantly to the Group’s performance and prospects, and we are looking forward to working with our new colleagues to deliver further value for our investors.’
Pat Ward, Breedon’s group chief executive, added: ‘Lagan represent a unique opportunity to enter a growing market with immediate scale and excellent opportunities for expansion. They significantly strengthen our cement offer, add to our mineral and downstream resources, bring us a bitumen import/export business, and add real weight to our contract surfacing operations.
‘Lagan are well run, well invested, with an experienced management team and a strong track record. Their culture is complementary to our own, with a sharp focus on customer service, a first-class workforce and a commitment to safety, which is a key priority for us.
‘From a strategic perspective, they provide us with a stronger platform from which to pursue further organic growth and bolt-on acquisitions.’
Kevin Lagan, chairman of Lagan Group, said: ‘I’d like to thank our committed and passionate staff for the role they have played in the growth of Lagan Group, and I wish them every success as they enter an exciting new chapter with Breedon, who I am confident will build on that success, supporting the development of the business in the years ahead.’
Following the acquisition of Lagan, Breedon Group will be one of the leading construction materials groups in the UK and Ireland, with two cement plants, around 70 quarries, 40 asphalt plants, 200 ready-mixed concrete and mortar plants, nine concrete and clay products plants, four contract surfacing businesses, six import/export terminals and two slate production facilities. The Group will employ nearly 3,000 people and have around 870 million tonnes of mineral reserves and resources.