Breedon seals Lagan Group acquisition for £455m
The largest of a series of takeovers for the rapidly expanding firm, the move is set to create a company employing nearly 3,000 workers.
Lagan is a supplier of construction materials and contract surfacing in Ireland and the UK with a modern cement plant in Kinnegad, nine active quarries, 13 asphalt plants and nine ready-mixed concrete plants.
In the year to 31 December 2017, Lagan generated revenues of £249m and EBITDA of £46m.
Breedon said the acquisition, which is on a cash- and debt-free basis, will extend its geographic footprint with immediate critical mass in Ireland and across the entire value chain. The acquisition also provides Breedon with an enhanced platform for further organic growth and bolt-on acquisitions.
Breedon will finance the acquisition by a combination of a new £150m term loan, a new £350m revolving credit facility and a £170m equity placing.
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, said: “Lagan represents a unique opportunity to enter a growing market with immediate scale and excellent opportunities for expansion. It significantly strengthens our cement offer, adds to our mineral and downstream resources, brings us a bitumen import/export business and adds real weight to our contract surfacing operations.
“Lagan is well-run, well-invested, with an experienced management team and a strong track record. Its 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, it provides us with a stronger platform from which to pursue further organic growth and bolt-on acquisitions.”
Kevin Lagan, chairman of Lagan Group, added: “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.”
The Lagan family business was formed in the 1960s but it was broken into two parts several years ago, with brothers Michael and Kevin Lagan going their separate ways.
In February, four businesses in Michael Lagan’s Lagan Construction Group went into administration putting up to 200 jobs at risk.
The four companies impacted by the move were Lagan Construction Group Holdings Limited, Lagan Construction Group Limited, Lagan Building Contractors Limited and Lagan Water Limited.