Dublin-headquartered builders merchanting and DIY goods provider Grafton Group has continued its international expansion drive with its fifth acquisition in the last 12 months.
The takeover of London-based specialist timber business T Brewer may be seen as a relatively small bolt-on purchase for the group but it will extend Grafton’s presence in the London merchanting market and provide “further opportunity for profitable growth of the group”.
The company trades from three branches in Clapham, Enfield and Amersham and had annual revenues of about £14m (€19m) last year.
Grafton has spent around £100m on acquisitions in the past year.
Arguably the most significant of those was the €94m October purchase of leading Dutch builders merchants, Isero which marked a first foray into the Netherlands and the group’s single biggest acquisition to date.
With a very solid balance sheet more activity in the market, from the Irish firm, is expected.
Grafton’s net debt is currently less than one times its earnings.
“Grafton is a key pick for 2016 on a number of points of differentiation, one of which is the ability to use a strong balance sheet to further consolidate the UK market.
"This latest deal therefore underpins our positive thesis and we expect more merger and acquisition activity as the year progresses,” said Goodbody Stockbrokers’ Robert Eason in a research note on the company.
“While small, the acquisition reinforces the group’s scope for further growth and expansion via its currently under-leveraged balance sheet.
"Even including this acquisition, we expect Grafton’s net debt/ earnings before interest, tax, depreciation and amortisation to fall to around 0.5x by the end of 2016,” Davy Stockbrokers added.
Grafton will issue its latest trading update next week, ahead of full-year results in March.
In August, it presented a strong set of interim figures, with first-half 2015 revenues up 7% to £1.1bn, group operating profit up 21% to £61.2m and pre-tax profits up 26% at £58m.
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