Breedon to acquire Northern Ireland building materials group Lagan
The UK's Breedon Group has confirmed that it is to buy Northern Ireland building materials group Lagan for £455m (€527m) on a cash- and debt-free basis.
Breedon is the UK's largest independent construction materials group and employs about 2,300 people, while Lagan supplies construction materials and contract surfacing in Ireland and the UK.
Meanwhile Lagan has a cement plant in Kinnegad county Westmeath, nine active quarries, 13 asphalt plants and nine ready-mixed concrete plants.
The acquisition will be financed by a combination of a new £150m term loan, a new £350m revolving credit facility, which replaces Breedon's existing £300m revolving facility and a £170m equity placing.
"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," Peter Tom CBE, Breedon's chairman, said.
"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."
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The acquisition enables Breedon to enter the "attractive" Irish construction market and provides "significant opportunities" to expand upstream though the aggregates business in Ireland and downstream through the asphalt and ready-mixed concrete operations, a statement from Breedon said.
At the year ended 31 December 2017 Lagan generated revenues of £249m, while it had earnings before interest, taxation, depreciation and amortisation of £46m.
Breedon expects to achieve annual cost synergies of approximately £5m by the third full year following the completion of the deal.
Commenting on the announcement of the deal, Kevin Lagan, chairman of Lagan thanked staff for the role that they played in the growth of the company.
"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."