Breedon drives further consolidation with acquisition of Cemex UK assets
Construction materials supplier Breedon has reached an agreement to buy certain UK assets and operations of global firm Cemex for a total consideration of £178 million.
The conditional agreement will see Breedon pay £155m in cash together with the assumption of £23m of lease liabilities.
Cemex’s UK assets encompass approximately 100 active operations across six divisions located in Scotland, Wales, North-East England, Norfolk, the East Midlands, and Yorkshire. The assets being divested consist of 49 active ready-mix concrete plants, 28 active aggregates operations, four depots, a cement terminal, 14 asphalt plants and four building products plants.
Last year the operations generated £178m revenue, delivering a £23m in trading profit.
After completion of the divestiture, Cemex will still retain an integrated business in the UK encompassing, among other things, cement production, ready-mix concrete, aggregates, asphalt, and paving solutions.
Pat Ward, Breedon’s group chief executive, said: “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 underrepresented and adding 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.”
He added: “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.”
Completion is expected in the second quarter of 2020, subject to completion of a TUPE consultation process.