Breedon chairman Tom has struck a deal to pay £336m for Hope Construction Materials, creating a business to rival the major multinational suppliers.
Tom said: “We’re creating a vertically-integrated business with one of the country’s largest cement plants, nearly 60 quarries, more than 200 ready-mixed concrete plants and around 750m tonnes of mineral reserves and resources – together with access for the first time to the rail-fed sector of the market.
“Together we will be an even stronger business, complementing one another geographically, operationally and culturally.”
Under the deal Amit Bhatia, Hope’s chairman, will join the Breedon broad and hold a large stake in the business.
Breedon expects to realise £10m in operational improvements after three years.
The firm will pay £202m in cash, supported with a £41m rights issue, and give Hope’s holding company Abicad an 18.4% stake in the enlarged business.
Tom said: “This acquisition is well-timed, with UK construction output forecast to expand by around 15% over the next four years and volumes of all our major products expected to grow strongly.
“We are confident that we will be able to continue delivering significant value for our shareholders in the coming years, with an even stronger platform for growth. We very much look forward to welcoming everyone at Hope to the Breedon family.”
Over the last three years Hope has grown to be a formidable competitor in the UK market. It boasts a national footprint of over 160 operational sites, including the Hope cement works in Derbyshire, five quarries and 152 concrete plants.
In the last 12 months, Hope turned over £286m selling 1.6m tonnes of cement, 4.7m tonnes of aggregates and 2.3m cubic metres of concrete. This generated a pretax and interest profit of £37m.
The deal is conditional upon the approval of the competition and markets authority and is expected to complete before next summer.
Peter Tom
Peter Tom has more than 50 years’ experience in the aggregates industry. He joined Bardon Hill Quarries as a school-leaver in 1956, becoming managing director in 1977 and chief executive of Bardon Group in 1985.
He went on to lead the merger of Bardon and Evered in 1991 and the enlarged group’s subsequent merger with CAMAS in 1997 to form Aggregate Industries.
After selling Aggregate Industries for £1.8bn to Swiss building materials group Holcim, he served as non-executive chairman of Aggregate Industries until his resignation in December 2007.
He enjoyed a few months of retirement before getting bored and deciding to get back to work.
In 2008 he co-founded with former Mowlem chief executive Simon Vivian a company called Marwyn Materials to consolidate the smaller end of the heavyside building materials industry.
By 2010 he was executive chairman of aim-listed Breedon Aggregates after the reverse acquisition of Breedon Holdings by Marwyn Materials. Since then he has been steadily building the business with a series of small acquisitions of quarrying businesses.
The latest deal puts him back at the top table with the UK big cement and aggregate producers, including the newly-rebranded Tarmac, following its recent acquisition by Irish materials giant CRH.
