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Thanks londoner 7 , Informal has ever . Yes i did spot in the news feed on there wwbsite about the Aquisition but even that seemed an afterthought being dated the 1st which was monday , I know its not a biggy in size but a very important step into the marine aggregate market . It will be interesting to find out the cost of this deal , I wouldn't like to say hiw much a dredger costs or dredging licences? Will also be interested to have your take on the interim results Londoner 7 , The hike in dedt was a little conserning to me .
Hi spogbat,
first, thanks to you and AI for highlighting these acquisitions.
To your question. My take from the latest update is that there is a good pipeline of potential acquisitions from small, like the three we've seen recently, to some more substantial. I'm guessing perhaps c£50-100m. I'd guess rather than RNS acquisitions which are c£5-10m cost and each relatively inconsequential to the bigger picture - though combined they become significant - Breedon will RNS the big ones with more detailed financials than we are seeing reported for these smaller ones.
Key, is that the current focus is on GB/ROI tie ins, rather than a move into the US. I guess a US move is 2023 earliest.
I note that this latest acquisition is reported on Breedon's website news section. The inconsistency is that the one you spotted wasn't.
Anyone know why these Aquisitions are not getting announced ? Surely has investers in the company it would be nice to know whats going on , doesn't make sense to me .
Severn Sands Acquisition
https://www.marketscreener.com/quote/stock/BREEDON-GROUP-PLC-4008531/news/Breedon-acquires-Severn-Sands-Limited-41163402/
Third acquisition in as many weeks
To close my previous post:
The phrase, “Breedon’s local business model and entrepreneurial culture”, is becoming something of a slogan. In these inflationary times pricing of material is key to margin and allowing teams to adjust pricing to local demand might give Breedon an edge over larger nationally run groups. Less than 3 weeks to the interims.
Hi L3, while I agree with your preference for small in-fill acquisitions rather than a large overseas acquisition, I disagree with your concerns about CMA restrictions on these activities.
The CMA is tasked with maintaining competition. In the context of Breedon activities that largely relates to RMX plant and quarries whose activities are conducted over relatively short distances. Much less so, Breedon’s activities in asphalt and surfacing.
I think the Cemex acquisition in Jan 2020 was a great addition to Breedon’s UK footprint. This is a comment from Cenkos at the time, “The £178m cash acquisition of 100 active UK sites from Cemex is classic Breedon doing what it does best; buying good regional assets that currently yield poor returns that Breedon can restore to more appropriate and enhanced levels using a combination of operational, investment and strategic levers, alongside its more focussed and dedicated management supervision. It is not a ‘transformational’ deal like Hope or Lagan, but is potentially more accretive long-term (especially versus the all cash consideration) and with less risk.”
I mention it here because it is a good example of the CMA’s activities. (Going back to my notes) Cemex brought in 55x RMX plant, 41x quarries and depots, and 18x asphalt sites, across 3 main regions, SW Wales, Scotland and NE England.
The result of the CMA’s deliberations was the divestment of 10x RMX plant, 2 quarries, 1x asphalt site and Breedon’s Dundee cement terminal. Not a significant number and I suspect many, particularly the RMX plant, would have gone in Breedon’s own rationalisation anyway. The Cement terminal is interesting because Breedon chose to hold onto the Cemex cement terminal at Lieth (Edinburgh) and divest their own terminal in Dundee in its place.
There are parts of the news on the Thomas Bow acquisition I find confusing, not least the comment that it was acquired from Nottingham City Council - an RNS would be more rigorous. But I found the following piece most interesting, “TBL, an East Midlands asphalt, surfacing and civil engineering business that delivered annual revenue of c.£29m in the year to March 2022, is a natural fit with Breedon’s local business model and entrepreneurial culture.”
Little to concern the CMA. I wonder if the civil engineering business will go the same way as Whitemountain’s. TBL’s c£29m revenues is significant in relation to GB surfacing in 2021 of £105m, but small in comparison to Irelands £159m considering the much larger GB market. Lots of scope for expanding the UK surfacing market through acquisitions. I wonder if retaining Alistair Bow and his team is part of the strategic push by Breedon into Highway’s England frameworks.
Quite interesting that BREE is still acquiring small companies. Much better strategy than going for a large one overseas. That would be my concern. Of course at some point the CMA might say enough is enough and they won't be able to acquire more companies here.
SP seems to have found the bottom. I know Londoner7 keeps an eye on the announcements of other players in this industry, so he might tells what if anything he learned recently.
ATB