Breedon has bolstered its American business with the $120m (£90m) acquisition of Falling Springs Quarry, a deal that’s in line with its ambition to scale up across the Atlantic.
The construction materials group, which already operates in Britain, Ireland and the US, has completed the purchase of the highly automated limestone quarry, which sits just 15 minutes from downtown St Louis, Missouri. It’s a sizeable asset with 185 million tonnes of reserves and annual output north of 2.2 million tonnes. Breedon plans to fold it into its existing operations in the region.
Over the years, Breedon has grown through a series of acquisitions, including assets from competitors as well as outright company buyouts. Often, there is a geographical motive to their deals.
And that looks to be the driving force with this deal. The quarry strengthens Breedon’s US platform and opens the door to further growth through vertical integration, the model that has served the group well at home.
Management expects the deal to lift margins and earnings straight away, a welcome characteristic for any bolt-on.
The acquisition was paid for through its existing revolving credit facility, and pro-forma covenant leverage would have stood at 2.0x at the end of December.
Rob Wood, Chief Executive Officer of Breedon Group, said: :”The acquisition of Falling Springs Quarry represents an attractive bolt-on investment which strengthens our US platform with a premium aggregates asset in an exceptionally strategic location.
“The business is well-invested, highly cash generative and extremely complementary to our existing operations in the St Louis area, supporting our long-term growth ambitions in the United States.”