Breedon Group acquires BMC Enterprises for US$300m

Breedon Group plc (LON:BREE), a leading vertically-integrated construction materials group in Great Britain and Ireland, has announced the acquisition of BMC Enterprises Inc. for an enterprise value of US$300m (£238.1m¹).

Strategic Highlights

·     BMC is a supplier of ready-mixed concrete, aggregates and building products headquartered in St Louis, Missouri with a strong track record of both organic and transactional growth

·     Compelling opportunity to launch a scalable third platform for Breedon in the fragmented and growing US construction materials market

·     Underpinned by highly attractive, established business with excellent margins

·     Well regarded and experienced management team with long track record who will remain with the business

·     Transaction expected to provide attractive financial returns while maintaining a strong balance sheet

Financial Highlights

·     In the twelve months ended 31 October 2023, BMC recorded unaudited Revenue of US$178.9m and unaudited adjusted EBITDA of US$35.5m²

·     Headline enterprise value represents c.8.5x 2023 unaudited adjusted EBITDA

·     Since 2013 BMC has delivered CAGR Revenue and adjusted EBITDA growth of c.12% and c.22% respectively through organic growth and bolt-on acquisitions

·     BMC has over 400 million tonnes³ of reserves and resources

Transaction Highlights

·      c.US$285m payable in cash on completion, subject to customary adjustments and retentions, funded through a draw down on Breedon’s existing Revolving Credit Facility

·      c.US$15m payable in Breedon shares, to be retained by the Vendor for a minimum of twelve months following Completion

·      Completion is expected to occur by 7 March 2024; subject to customary closing conditions

·      Expected to be earnings enhancing in the first full year of ownership⁴

·      Post-acquisition Pro Forma Covenant Leverage for the Group of c.1.4x⁵; enabling flexibility for dividends and future bolt-on acquisitions across each of our platforms

Rob Wood, Chief Executive Officer, commented:

“The acquisition of BMC represents a compelling opportunity for Breedon to launch our third platform in the USA.  BMC has an excellent performance track record over a sustained period and is positioned in an attractive market for future growth.

“As a high-quality aggregates and concrete business that has grown at pace, organically and through acquisitions, with a strong management team and deep local knowledge, BMC’s culture and values are fully aligned with the Breedon business model.

“The acquisition is expected to be earnings enhancing for shareholders while allowing Breedon to maintain a conservative and flexible balance sheet to pay dividends and make further bolt-on acquisitions across each of our platforms as opportunities arise.

“We are delighted to welcome our BMC colleagues to Breedon and look forward to working with them to build Breedon’s presence in the USA.”

Notes:

1.      GBP: USD Exchange Rate of 1: 1.26

2.      BMC financials have been extracted from the management accounts of BMC and adjusted for items which will not reoccur under Breedon ownership.  BMC financials are unaudited and have been prepared under US GAAP so may not be directly comparable to Breedon financials which are prepared under IFRS.

3.      Breedon and BMC’s best estimate of BMC’s reserves and resources at the date of this announcement, expressed as metric tonnes

4.      This statement should not be construed as a profit forecast or interpreted to mean that the future earnings per share, profits, margins or cashflows of the Group will necessarily be greater than the historic published figures

5.      Pro Forma Covenant Leverage is the ratio of the Group’s Underlying EBITDA to Net Debt calculated assuming that the transaction had completed on 31 December 2023. Covenant Leverage is used in determining compliance with the Group’s banking covenants.