Marshalls to buy brick manufacturer Edenhall, to exceed FY expectations

Marshalls announced the acquisition on Wednesday of concrete brick manufacturer Edenhall for up to £17.2m as it said it expects to exceed full-year expectations thanks to better second-half revenue growth.

The hard landscaping products manufacturer has agreed to pay an initial cash consideration of £11.8m and a deferred consideration of up to £5.4m dependent on business performance over a three-year period.

The deal, which is expected to be earnings-enhancing in its first full year after completion, will be funded from existing group facilities, which are being strengthened by an additional revolving credit facility with RBS of £25m.

Chief executive Martyn Coffey said: "Marshalls' strategy is to grow both organically and through carefully selected earnings enhancing bolt-on acquisitions with a particular focus on those parts of the market where higher levels of growth are anticipated, including new build housing, road, rail and water management.

"The acquisition of Edenhall represents a significant step towards achieving further growth in the new build housing market. Edenhall is a profitable business with a strong track record of quality, reliability and service, primarily targeting builders' merchants and regional and national housebuilders. The acquisition is in line with our stated strategy of expanding into adjacent building products related to new build housing."

In the year to the end of December 2017, Edenhall generated revenue from continuing operations of £33m and pre-tax profit of £2.8m.

Marshalls also said on Wednesday that recent trading has been strong, with revenue for the 11 months ended 30 November up 14% at £465m. It said the self-help programme to support organic growth is progressing well and the underlying indicators in the new build housing, road, rail and water management markets remain supportive.

As a result, it now expects to surpass full-year expectations.