(Alliance News) - Construction material firm SigmaRoc PLC on Tuesday unveiled plans to buy Belgian blue limestone company CDH Developpement SA for EUR45 million.
The EUR45.1 million cash price consists of an initial EUR29.1 million initial consideration plus EUR16.0 million deferred - the deferred payment being EUR2.0 million on the first anniversary of the acquisition's completion and another EUR14.0 million on the second anniversary.
To fund the purchase, SigmaRoc plans to raise around GBP32.8 million via a 79.9 million share placing at 41 pence per share. Of this, GBP25.8 million - EUR29.1 million - will go towards the initial consideration and the rest will be used "for future investment opportunities and general working capital".
The placing will take place via an accelerated bookbuild, with Liberum Capital Ltd acting as sole bookrunner. The 41p per share price is equal to the firm's Monday closing middle market price. Shares in SigmaRoc were up 2.8% at 42.15p in London on Tuesday afternoon.
SigmaRoc explained that CDH is "the holding company of Carrieres du Hainaut SCA and CDH International SCA, the Belgian blue limestone ('bluestone') and aggregates business". Bluestone is used for residential, commercial, and infrastructure projects and has "architectural and cosmetic applications".
CDH is the largest bluestone quarry in Europe and has 50% of global market share, as well as being "a major aggregates quarry", with production of between 1.5 million and 2 million tonnes per year.
In the year to June 30, CDH's revenue was EUR45.9 million and its underlying Ebitda was EUR12.0 million.
The construction materials company will purchase CDH's issued share capital from Verlinvest SA, Compagnie Benelux Participations (Cobepa) SA, and CDH Management SPRL. The total enterprise value of the acquisition including debt comes to EUR81.3 million, 6.8 times CDH's underlying earnings before interest, depreciation, taxation, and amortisation for the year to June end.
Once complete, the acquisition "will be double-digit percentage accretive to" SigmaRoc's earnings.
At present, 15% of the quarry's volume generates all of CDH's profit, with profit only derived from bluestone sales. At present, all of the limestone aggregate from the bluestone mining is considered a waste product and "quarried under an unprofitable third-party agreement" ending 2022.
SigmaRoc, however, expects it will be able to "generate additional profit from the significant reserves of quality limestone aggregate". Moreover, integrating CDH with SigmaRoc will be accretive to value, as the company's product offering will expand and it will have more than 150 years of mineral reserves and resources.
"This acquisition, which is consistent with our strategy of growth, provides us with an exciting opportunity to substantially strengthen our existing presence in Belgium, one of the highest infrastructure densities in the EU," said SigmaRoc Chief Executive Max Vermorken.
"Across the group, I am extremely proud of what we have already achieved and excited about this next stage of our expansion. CDH is over 130 years old, has over 150 years of remaining reserves, is Europe's largest Dimension Stone quarry and one of Belgium's largest construction aggregate producers. This unique combination offers SigmaRoc significant potential in the Benelux market," the CEO added.
By Anna Farley; annafarley@alliancenews.com
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