Grafton strengthens UK presence with TG Lynes buy

Dublin-based builders’ merchants group Grafton has broadened its presence in the UK via the purchase of niche company TG Lynes for an undisclosed sum.

The English company is a market leader in the southeast of the country in the area of mechanical engineering products which it distributes for use in commercial and public sector buildings as well as apartments and industrial processes.

The Enfield-based firm’s main product areas are pipes, valves, fittings, support systems, ancillaries, heaters, and fans.

Grafton said the purchase not only complements the development of its Plumbase Industrial business, which trades from 10 locations and was established as a specialist operation to enhance Grafton’s UK offering, but also greatly enhances its coverage of this segment of the merchanting market in the UK and marks a significant step forward.

“The acquisition further strengthens the group’s platform for future growth in this target sector and will be earnings’ enhancing from completion,” Grafton’s management said in a statement yesterday.

“The acquisition of TG Lynes is a typical bolt-on for Grafton and follows five such deals last year,” said Robert Eason, analyst with Goodbody Stockbrokers.

“With net debt to earnings before interest, tax, depreciation, and amortisation set to go below 0.5 times at the end of full-year 2015, Grafton has plenty of firepower to continue adding to earnings through mergers and acquisitions.”

Mr Eason also said that, last year, TG Lynes had sales of around £18m (€25m) and operating profits of over £2m, “which represents a strong double-digit margin”.

“Although no financial terms were disclosed, Grafton notes that the acquisition of TG Lynes will be immediately earnings enhancing,” according to Flor O’Donoghue of Davy Stockbrokers.

“The deal represents another example of Grafton’s strategy of expansion through low-risk, bolt-on deals in the UK. “TG Lynes joins the likes of Crescent Building Supplies, Direct Merchants and Beaumont as examples of recent acquisitions in the UK.”