Breedon buys 'certain assets and operations' of Cemex UK in £178m deal

Construction group Breedon has acquired 'certain assets and operations of Cemex UK' in a £178m deal that gives it control of around 100 active operations across six divisions in England, Scotland and Wales.

Breedon will pay £155m in cash and take on £23m of lease liabilities under the terms of the takeover.

It said the conditional agreement with Cemex was consistent with its strategy of purchasing “earnings-enhancing aggregates-related businesses with strong potential for performance improvements and synergy benefits.”

Completion of the deal is expected in the second quarter of 2020, subject to a TUPE consultation process.

However, Cemex stressed that Breedon had not acquired all of Cemex UK operations and that, after completion of the divestiture, it will still retain a substantial integrated business in the UK.

This will include cement production, ready-mix concrete, aggregates, asphalt and paving solutions.

Pat Ward, Breedon group chief executive, said: “This is a unique opportunity to extend our national network through a single value-enhancing transaction, substantially increasing our footprint in several regions of Great Britain where we are currently underrepresented and adding approximately 170 million tonnes of mineral reserves and resources.

“It also delivers a step-change in the development of our national asphalt strategy.

“There is potential to drive significant performance improvements across these new assets and they will also strengthen our platform for further organic growth and bolt-on acquisitions.”

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Breedon Group plc operates two cement plants and a network of quarries, asphalt plants and ready-mixed concrete plants, together with slate production, concrete and clay products manufacturing, contract surfacing and highway maintenance operations.

The acquisition will see it employing more than 3,600 people.

Cemex said it was not yet clear how many employees would be affected, but that it was reassuring customers, suppliers and associated partners that from now until the end of Q1 2020 there would be no changes to trading or supply.

In a statement, Cemex added: “The plants and quarries being sold fit more effectively with the new owner, so they will be more likely to thrive in new ownership. The divestment also releases cash for Cemex to improve its financial position and/or invest elsewhere.”