Rooftiles manufacturer Marley Group planned to float last year but it did no go ahead. Fully listed paving and tiles supplier Marshalls (LON:MSLH) is paying £535m for Marley, which adds pitched roofing to its roofing products. This transaction is classed as a reverse takeover.
This deal comes at a time when the UK construction and repair and maintenance markets, which have good medium-term prospects.
There were indications that Marley would have been valued at between £470m and £500m if it had joined the Main Market. Management blamed market instability for pulling the float. It is unclear how much debt would have been included if the flotation had gone ahead.
Valuation
Marshalls is paying £371m in cash, with £187m raised from a placing and open offer, and 24.1 million shares, which includes two million shares issued to Marley management, issued at 680p each. The placing price should be set on Thursday.
The key management of Marley will be staying on and continue to operate Marley as a separate division.
Revenues increased from £165.8m in 73 weeks to end December 2020 to £172.6m in 2021. Last year’s operating profit was £25.3m.
The acquisition price is equivalent to 10.7 times Marley’s 2021 EBITDA and in the first full year of ownership Marley will enhance earnings by double digits.