AIM-listed brick-maker has acquired Carlton Brickworks for £38.4m
Companies: Michelmersh Brick Holdings PLC
AIM-listed brick-maker Michelmersh says it has acquired the entire issued share capital of fellow brickmaker Carlton Brickworks in a £38.4m move that will immediately enhance the earnings of the Group.
Carlton, which operates a 93-acre site in Barnsley that was established in the 1880s, currently manufactures up to 37m bricks per year, generating £13.1m in revenues and £2.62m in pre-tax profits last year.
Speaking about the move the company said the deal would help Michelmersh get access to new regional markets and provide an opportunity for cross-selling, product synergies, and increased efficiency:
"The Acquisition is expected to be significantly earnings enhancing in the current financial year and increase the overall operational cash flow of the Company going forward, assisting in, post debt servicing and repayment, further investment within the Group and future shareholder distributions."
The firm is being bought for £38.4m, financed through a mixture of cash and new facilities provided by HSBC. The Board says it is also anticipating proceeds from the sale of Dunton "shortly".
The deal will see MBH pay £30.7m in cash, with £3.5m in deferred consideration payable in three instalments on each of the next three anniversaries. The company also said it had applied for 4.7m new shares to be issued as part of the deal.
Speaking about the integration of Carlton, Michelmersh said the new business would sit alongside the Group's existing brickworks and would continue to manufacture its current range of products:
"The current Managing Director, Pat Furr, is retiring from the business at the end of 2017 but will help with the business transfer as the current manufacturing team fall into the Group operating management structure that will oversee performance, quarry management and health and safety. The sales staff at Carlton will continue to serve the existing customer base but over time will be integrated into the Michelmersh national sale structure to encourage cross-selling of products and widening of the geographical presence of the enlarged Group."
