Breedon has struck a deal to buy a major slice of the aggregate operations of global materials giant Cemex for £155m cash and liabilities of £23m.
Breedon boosts aggregate reserves to 1bn tonnes and aims to expand asphalt business
The Cemex business that is being sold employs 650 staff across 100 active operations in the UK and will drive further consolidation of the heavyside material sector.
The sale consists of 49 ready-mix plants, 28 aggregate quarries, four depots, one cement terminal, 14 asphalt plants, and four concrete products operations.
These sites are grouped across six divisions located in Scotland, Wales, North-East England, Norfolk, the East Midlands, and Yorkshire.
Part of Cemex’s paving solutions business in the UK, together with some inactive sites, are also included in the sale to Breedon.
Cemex said it would still retain a substantial operation in this country, including cement production, ready-mix concrete, asphalt, and paving solutions.
Pat Ward, Breedon’s group chief executive, said: “This is a unique opportunity to extend our national network through a single value-enhancing transaction, substantially increasing our footprint in several regions of Great Britain where we are currently underrepresented and adding 170 million tonnes of mineral reserves and resources. “
He said that the enlarged group’s total mineral reserves and resources would stand at more than 1 billion tonnes. Several greenfield sites are also included as part of the deal offering further potential for expansion.
Ward added: “It also delivers a step-change in the development of our national asphalt strategy.
“There is potential to drive significant performance improvements across these new assets and they will also strengthen our platform for further organic growth and bolt-on acquisitions.”
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.”
Last year Cemex generated £178m revenue, delivering a £23m in trading profit.
Breedon will notify the UK Competition and Markets Authority for clearance but said that completion was not conditional on conclusion of the CMA process.
The deal is expected to be finalised in the second quarter of this year, subject to completion of a TUPE consultation process.