Grafton Group in €91.5m Dutch purchase

Irish-headquartered builders’ merchants and DIY firm Grafton Group have bought a market leading Dutch company in its biggest ever deal in Continental Europe.

Grafton has acquired Isero, a specialist distributor of tools and fixings in the Netherlands, for €91.5m.

The Dutch company has 38 branches trading under a number of different brands and generated revenue of €94m for the year to the end of June.

Commenting on the deal, Grafton Group chief executive Gavin Slark highlighted the pick-up in the Dutch market which he said should present opportunities for growth in the coming years.

“The acquisition of Isero will give Grafton a presence in the Netherlands for the first time and strengthen its branch footprint in the mainland European market.

"Isero is being acquired at an early stage in the recovery of the Netherlands economy and there are excellent opportunities for the organic and acquisitive expansion of the business,” Mr Slark said.

“Isero’s business model supports Grafton’s core values. It has a strong management team and customer centric culture with a focus on value added services and high stock availability.

"Isero’s small store format will broaden the Group’s merchanting capabilities and we are excited at the prospect of working with the Isero team.”

The company is being acquired from its majority shareholder, H2 Equity Partners; management who hold a small shareholding; and a number of private individuals.

Isero had Ebitda of €10m last year and analysts at Davy Stockbrokers said initial calculations indicated its acquisition would add 3-4% to current earnings forecasts for 2016.

“Given its strength, the deal represents a welcome use of Grafton’s resources and should enhance the group’s offering,” analysts Flor O’Donoghue and Michael Mitchell said in a note.

The Isero buyout will see Grafton increase its footprint across continental Europe with the Netherlands joining Belgium as a country in which it has operations outside of its traditional bases of the UK and Ireland.

Construction has picked up in the Netherlands recently with Euroconstruct, the pan-European research association, forecasting a 2.9% increase in construction volumes this year and a further 2.8% growth in 2016.

Grafton flagged its intention to expand its European operations earlier this year following the publication of its annual report.

Chairman Michael Chadwick said its growth strategy was based on extending its reach into western European countries and regions.

Group revenue last year increased to €973m.


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