SigmaRoc buys chunk of Welsh quarry operator GDH
By Josh White
Date: Monday 15 Apr 2019
(Sharecast News) - Buy-and-build construction materials group SigmaRoc has acquired a 40% equity interest in south Wales quarrying group GDH for a cash consideration of £4.89m, it announced on Monday.
The AIM-traded firm said it had also entered into an option agreement with the owners of GDH, whereby it had the exclusive right to purchase the remaining 60% of the company for cash consideration of £7.5m on or before 31 August 2020.
It said the initial consideration was funded through a combination of internal resources and its available credit facilities, with SigmaRoc intending to fund the further consideration on the same basis, implying no dilution for equity holders.
Assuming the group exercised the option, on completion of the further acquisition, the board said it expected the group's net debt-to-EBITDA ratio to remain close to the current level of 2:1.
The acquisition increased group operations to 11 quarries and 26 operational sites with more than 100 million tonnes of reserves and resources across Great Britain.
GDH posted average revenues of £23.4m and adjusted EBITDA of £3.4m for the calendar years ended 31 December 2015, 2016 and 2017, SigmaRoc noted, and held assets with a book value of approximately £26m.
It said the acquisition of both the 40% and 60% stakes would be "immediately" earnings enhancing, given the absence of dilution for equity holders, and confirmed that Tim Hall - former chief executive of Breedon South - would join the board of SigmaRoc in April as a non-executive director.
"GDH is a great business with a substantial asset footprint spanning across South Wales," said SigmaRoc executive director David Barrett.
"GDH will be the heart of our South Wales platform - it is a business with a long history of success and much future potential.
"Ian Harries' continued involvement will assist us in delivering growth across the platform for the benefit of our shareholders."
Chief executive officer Max Vermorken added that he was "extremely proud" of what the small SigmaRoc team had been able to achieve within a short space of time.
"With GDH as part of the Group, we will operate nearly a dozen quarries, 100m tonnes of reserves and resources, close to 500 people employed, with significant skill, drive and enthusiasm within the various management teams.
"Tim joining the board is a very positive next step for us," Vermorken said.
"As a small team we all contribute to the evolution of our business and adding Tim to that mix will most certainly accelerate our development even further."
Finally, Ian Harries, the chairman of GDH, said that having been approached by several companies to buy the business, SigmaRoc was the only one it engaged with directly due to its business ethos and commitment to their workforce, which had been a key factor in driving the business forward.
"We are very excited by SigmaRoc's investment in us which will allow us to continue to grow the business into the future, creating job opportunities and continuing to serve our long standing customers," Harries explained.
"The strength and depths of SigmaRoc will enable us to drive our business further for which the process has already commenced."
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