Grafton Group boosts Dutch presence with Gunters Meuset deal
Building materials company Grafton Group is to acquire Dutch-based tools, fixings, and ironmongery business Gunters en Meuset BV (G&M).
Completion of the deal for the Amsterdam-based firm is expected to be completed in January following approval by the Dutch competition authority.
G&M trades from 14 branches and reported revenue of €33.4m for 2015.
The move comes after Grafton, which is the parent company of Woodies DIY, entered the Netherlands market in November last year with the acquisition of Isero.
Isero paired up with G&M will strengthen Grafton's market position in the market, trading from a network of 53 branches.
Chief executive Gavin Slark said G&M provided a "unique strategic opportunity" for Grafton.
"G&M is a high quality business and brand that is synonymous with the ironmongery market in Amsterdam where it has traded for 190 years.
"This will be a further important step in the group's development strategy in the Netherlands and increases our exposure to the growing Dutch economy. The enlarged business should also provide a good platform to capitalise on other appropriate development opportunities," the Grafton boss said.
Grafton's combined business in the Netherlands will lead to annual sales of around €130m with the company operating out of the country's five largest cities.
Goodbody analyst Robert Eason described it as an "attractive acquisition" for the business.
"The deal underscores the Group's ability to utilise its balance sheet strength to reinforce one of its key areas of differentiation and further diversify the business," he said in a note.
Shares in the company were up 1pc yesterday at £5.77 (€6.74).
Revenue at the company over the last 12 months has surged by 12.8pc with sales reaching £2.11bn.
Davy analyst Michael Mitchell expects the company to further increase its stake in the Netherlands through both organic and inorganic means.
"It is of strategic importance to Grafton's ambitions in the fast-growing Dutch end-market. Over the course of the past 12 months, Grafton has now built a leading position in each of the country's five largest cities. With around 13pc market share, it now has greater scale to fully benefit from the on-going cyclical recovery in the region," he said.
Grafton reported strong growth in Ireland, benefiting from gains in employment and increases in disposable income across the country.
The strong revenue growth in Ireland will come as welcome news to Grafton, however Mr Slark warned earlier in the year that it could take up to five years for the levels of construction here to meet demand.
"It's great to say you need to stimulate the market, but I also think that it's important that whatever we do in Ireland that it's done sensibly, so we don't have a situation like we did before," Mr Slark said in September.
Like-for-like revenue increased modestly in the four months to the end of October in the UK Merchanting business.
In August, operating profit at Grafton Group soared by 18pc in the first half of the year as the company's Irish presence performed strongly.
Grafton posted an operating profit of £64.8m (€74.2m) on revenues of £1.23bn (€1.40bn), up 13pc on the same period last year.