Grafton acquires builders group in UK
The purchase of Direct Builders Merchants — which generated revenues of nearly £5m (€6m) last year and operates three general merchanting branches in towns across Kent — marks the Dublin-based builders supply group’s second UK bolt-on acquisition this year.
No financial details of the transaction were provided but the deal, which comes less than a week after Grafton published a strong set of first-half figures, has been well-received by analysts.
Robert Eason of Goodbody Stockbrokers said that Grafton’s current financial strength makes it “well-placed to take advantage of such deals”.
“In addition, Grafton’s relative size means that it will not be curtailed by competition issues... It is such deals, coupled with an underlying recovery and organic growth opportunities, that provide significant growth potential for Grafton,” he said.
The Direct deal is relatively modest for Grafton and will add less than 1% to its UK branch network, but it remains a significant deal in principle, according to Flor O’Donoghue of Davy Stockbrokers.
“Bolt-on deals are a core and established part ofthe group’s strategy in the UK.
“These transactions add scale, extend Grafton’s position in a low-risk manner, help consolidate the sector and cover geographic gaps,” he said.
Grafton already trades from more than 500 UK locations, with more than half being builders merchanting outlets.
Speaking on the back of last week’s first-half results, which showed strong double digit growth in revenue and underlying profits, Grafton chief executive Gavin Slark said acquisitions would continue to contribute to the group’s expansion plans and that it had no concern over affordability for any deal.
While expanding beyond its core UK, Ireland and Belgium territories is likely to happen, in time, most of Grafton’s upcoming deals are likely to be British-based bolt-ons in the medium-term.
CONNECT WITH US TODAY
Be the first to know the latest news and updates
