Breedon Group acquires Lagan for £455 million

Breedon Group acquires Lagan for £455 million

The Leicestershire construction materials firm has completed its biggest acquisition so far after agreeing the nine-figure deal to buy Northern Irish rival Lagan.

Belfast-based Lagan Group supplies construction materials and contract surfacing in Ireland and the UK and operates a cement plant in Kinnegad, nine active quarries, 13 asphalt plants and nine ready-mixed concrete plants.

The combination of Breedon and Lagan will create a leading independent construction materials group in the UK and Ireland and extend Breedon’s geographic footprint with “immediate critical mass” in Ireland.

The Acquisition also provides Breedon with an enhanced platform for further organic growth and bolt-on acquisitions.

In the year ended 31 December 2017, Lagan generated revenues of £249 million and EBITDA of £46 million.

The consideration will be financed by a combination of a new £150 million term loan, a new £350 million revolving credit facility which replaces Breedon’s existing £300 million revolving facility, and a £170 million equity placing.

The Acquisition enables Breedon to enter the Irish construction market and provides significant opportunities to expand upstream though the aggregates business and downstream through the asphalt and ready-mixed concrete operations.

Breedon expects to achieve annual cost synergies of approximately £5 million by the third full year following Completion.

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, added: “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, said: “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.”