Breedon to buy CEMEX UK for £178m

Construction materials group Breedon has entered into a conditional agreement with CEMEX to acquire certain assets and operations in the UK for £178m.

Breedon said on Wednesday that it would purchase CEMEX's UK assets for £155m in cash together with the assumption of £23m of lease liabilities as part of an effort to further enhance its position in Britain and Ireland.

The AIM-listed group also said the acquisition was consistent with its strategy of acquiring earnings-enhancing aggregates-related businesses with strong potential for performance improvements and synergy benefits.

Breedon will fund the acquisition from its existing £350m revolving credit facility and a drawdown of £80m through the exercise of an accordion option.

CEMEX's UK assets encompass approximately 100 active operations across six divisions located in Scotland, Wales, North-East England, Norfolk, the East Midlands and Yorkshire. The assets generated revenues of £178m and underlying earnings of £23m in 2018.

Completion was expected to take place in the second quarter of 2020.

Chief executive Pat Ward said: "In addition to the cost synergies we anticipate, we also expect the deal to be accretive to both earnings and free cash flow in the first full year, with a positive ongoing impact on the cash generation of the enlarged group."

As of 0845 GMT, Breedon shares had picked up 2.91% to 84.39p.