Building firm ‘still open to talks’

HEITON remains open to talks with rival builders’ merchants and DIY group Grafton in spite of Grafton’s “low-ball” approach that was rejected last week, chief executive Leo Martin said yesterday.

But he added the company was prepared to go it alone and pursue its own expansion programme if a deal could not be agreed.

Mr Martin left Grafton in no doubt that it would need to propose a significantly higher price before the Heiton board would recommend it to shareholders.

Grafton originally valued Heiton at €5.80 and €6.00 before making the €6.35 proposal that became public last week. The €6.35 approach included a provision that yesterday’s 10.7c final dividend would not be paid to shareholders, giving an effective price of €6.243. Some analysts consider Grafton’s price low and suggest a better deal, perhaps in excess of €7.00 per share, may be on the way for Heiton shareholders.

Heiton declined to comment yesterday on its plans relating to the forthcoming sale of the Brooks group of builders providers, which holds the number three slot in the Irish market, citing confidentiality agreements.

But news it has struck a deal with its banks to fund a war chest of €80 million for its own expansion plans suggests it sees a future in being a standalone entity. If Heiton were to succeed in getting its hands on Brooks, which holds approximately 5% market share, competition concerns would be likely to scupper a subsequent takeover of an enlarged Heiton group by Grafton. A combined Grafton/Heiton/Brooks entity would hold approximately 25% of the market and would be unlikely to find favour with the Competition Authority.

Heiton’s current strategy is to play a “leading role in the consolidation of the Irish builders merchants market” and to “build a pipeline of acquisition and greenfield opportunities for existing businesses”. Mr Martin said Heiton was an “experienced bolt-on acquirer” that had been successful in integrating businesses and achieving substantial cost savings and efficiencies.

But he declined to comment on future relations with Grafton if a revised approach could not be recommended to shareholders. Grafton already owns more than 29% of Heiton.