Forterra plc Acquisition of Bison Manufacturing Ltd (3528M)
28 July 2017 - 4:00PM
UK Regulatory
TIDMFORT
RNS Number : 3528M
Forterra plc
28 July 2017
28 July 2017
Forterra plc
Acquisition of the trade and assets of Bison Manufacturing
Ltd
Forterra plc ("Forterra"), a leading UK producer of manufactured
masonry products, announces that it has entered into an agreement
to acquire the trade and assets of Bison Manufacturing Ltd
("Bison") from Laing O'Rourke plc ("Laing O'Rourke") for GBP20m.
The acquisition will be funded from the Group's existing cash
balances and is expected to complete in Q3 2017. Bison is the UK
market leading manufacturer of hollowcore precast concrete flooring
with a highly automated manufacturing facility located at
Swadlincote, Derbyshire, which was opened in 2006.
This acquisition provides a unique and immediate opportunity for
Forterra to take a leadership position in the UK precast concrete
market whilst also expanding its currently capacity-constrained
business. It also enables the Group to take advantage of the
growing demand for these products in the residential, commercial
and infrastructure markets, which are underpinned by Government
initiatives to tackle the country's housing deficit and improve
infrastructure. The Swadlincote plant is the largest and most
technically advanced hollowcore manufacturing facility in the UK.
In addition, the site includes a specialist precast facility
capable of producing a wide range of bespoke precast concrete
products. Forterra management estimate that it would cost in excess
of GBP35m to replicate these assets on a greenfield site.
Furthermore, the Bison brand is highly respected and valued in the
precast market.
The Swadlincote plant has been operating at little more than 50%
capacity utilisation. The acquisition will allow Forterra to expand
its own precast concrete business to enable increased sales across
our range of concrete product whilst benefiting from production
efficiencies and economies of scale as the utilisation of the
Swadlincote facility is substantially increased.
The acquisition also provides an opportunity to partner with
Laing O'Rourke, a leading innovator and pioneer in off-site
construction methods, and includes a five year commercial agreement
for Forterra to supply hollowcore and other precast products to
Laing O'Rourke.
The acquisition constitutes a Class 2 transaction for the
purposes of the UK Financial Conduct Authority's Listing Rules. The
gross assets that are subject to the transaction relate purely to
tangible fixed assets and inventory at the Swadlincote site and had
a net book value in the financial statements of the seller of
GBP10.0 million at 31 March 2017. Revenue attributable to those
assets was GBP22.8 million for the year to 31 March 2017, and the
loss (at EBITDA level) attributable to those assets was GBP1.1
million.
Following completion, Forterra expects to generate a return on
its investment in excess of its cost of capital by 2019 through
efficiency improvements, proposed consolidation of production
between sites and leveraging procurement synergies.
Stephen Harrison, Chief Executive, commented:
"The acquisition is a unique opportunity to transform Forterra's
precast business in terms of scale and capability. We are acquiring
well invested assets whilst at the same time solving the capacity
constraints on growth within our own business. We gain a
well-respected brand and will attain a market leading position as
we look to grow the combined business.
"We are confident that the acquisition will create value for our
shareholders".
Forterra will announce half year results for the six months
ended 30 June 2017 on 1 August 2017.
Enquiries
+44 (0) 1604 707
Forterra plc: 600
Stephen Harrison (CEO)
Shatish Dasani (CFO)
FTI Consulting: +44 (0) 20 3727 1340
Richard Mountain
Nick Hasell
Further information relating to the Company and its group can be
found at www.forterraplc.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
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