Structural steel producer Severfield plc (LON: SFR) announced it had entered into an agreement to wholly acquire structural steel work business Harry Peers and Co Limited.
The deal announced today was valued at a total consideration of £30.4 million. The Company said an initial cash consideration of £18.0 million would be financed through cash reserves and a term. The remaining £12.4 million will comprise of cash and cash equivalents. Severield then said a conditional £7 million performance-based deferred consideration is in place, which would be paid by late 2020 should ‘certain financial and operational targets’ be met.
The Group added that Harry Peers commands a respected position within a niche area of the nuclear and defence sectors. Over the next few years, the Company is expected to continue its focus on blue chip customers and is expected to grow on the back of the UK Government’s decommissioning investment programme.
Alan Dunsmore, Chief Executive Officer, added his insight on the acquisition,
“This acquisition will help Severfield continue to deliver on its strategic objectives. Harry Peers’s experience in specialist, highly regulated, non-cyclical markets will enhance our future growth plans through expanding the Group’s capabilities and sector reach.”
“We believe Severfield is best placed to help Harry Peers continue its profitable growth trajectory, through increased scale and investment and together with Harry Peers’s strong management team we have a real opportunity to develop a broader position within the UK structural steel services market.”
The Company’s statement added,
“The Board of Severfield believes that the long-term investment profile of Harry Peers’s key market positions in the highly regulated markets of nuclear, process industries and power generation, enhances its areas of expertise and broadens its market exposure.”
“With the scale and capabilities of the Group, there are substantial opportunities to grow Harry Peers through a number of combined operational initiatives such as new business development functions for Harry Peers, European contract opportunities, and investment in technology-driven enhancements.”
The Company’s share price rallied modestly by 0.084% or 0.060p to 71.16p per share 01/10/19 12:06 BST. Peel Hunt analysts have reiterated their ‘Buy’ stance on Severfield stock, their p/e ratio is 10.69 and their dividend yield stands at 3.94%.
Elsewhere in construction and development news, there have been updates from; Billington Holdings PLC (LON: BILN), Epwin Group PLC (LON: EPWIN), Ashtead Group plc (LON: AHT), SIG plc (LON: SHI), Alumasc Group plc (LON: ALU), Somero Enterprises Inc (LON: SOM) and Barratt Developments Plc (LON: BDEV).