AIM-quoted cash shell Marwyn Materials has acquired aggregates producer Breedon Holdings, formerly known as Ennstone, in a reverse takeover.
Under the terms of the deal, Breedon’s shareholders will receive £2.25 million in cash and the equivalent of a 10 per cent stake in the enlarged company, which is to be renamed Breedon Aggregates.
Proceeds of some £50 million from a placing by Marwyn Materials will be used to pay off some of Breedon’s debt and provide roughly £25 million for working capital and acquisitions, while a bank facility of £94.5 million will be provided by Breedon’s existing lenders, who owned 67 per cent of the group prior to the Marwyn deal.
Barclays Corporate led the syndicate of lenders which collectively held a controlling stake in Breedon. Wyatt Crowell, managing director of coverage at the bank, says the deal ‘represents the best result for all Breedon stakeholders’.
Investment house Marwyn, which specialises in using quoted cash shells as platforms for a buy-and-build strategy, reports that the deal is its largest transaction to date, with the total capitalisation of Breedon Aggregates expected to be in the region of £160 million.
Peter Tom, chairman of Marwyn Materials, comments, ‘Breedon represents a unique opportunity for us to acquire a profitable and well-invested building materials company at or near the bottom of the [economic] cycle. We are confident that we can appreciably improve the financial and operational performance of the business over the next few years.’
No new directors are joining the board of the enlarged company at admission. The company will continue to be led by Tom, who has subscribed for new shares as part of the placing and will have a shareholding of 5.5 per cent in the enlarged group.