LONDON, UK: Michelmersh Brick Holdings (AIM: MBH), the specialist brick manufacturer, has acquired Fabspeed Holdings, a leading brick fabricator and manufacturer of off-site pre-built brick products, for initial consideration of £6.25 million.
Frank Hanna, Joint Chief Executive Officer, said: “We are delighted to announce the acquisition of Fabspeed and welcome the team to the Group. Fabspeed is a great addition to our business, enabling us to create a leading business in both clay and pre-fabricated products.
“With cross selling and distribution synergies to unlock over the coming periods, we expect to enhance what is already an earnings accretive deal to deliver further value for our shareholders as we integrate both businesses.”
Fabspeed is a manufacturer of pre-fabricated building products with a significant focus on bespoke, complex and specialist products, including chimneys, arches, canopies and dormers. Fabspeed has a strong and longstanding management team who will transfer with the business following completion. The Business currently operates from three facilities, two in West Yorkshire and one in Oxfordshire, employing approximately 89 people and Fabspeed will immediately benefit from Michelmersh’s broader infrastructure and management support.
Michelmersh Brick Holdings Board believes that the acquisition is another important step in the strategy for Michelmersh to remain Britain’s leading specialist brick manufacturer. Combining Fabspeed with Michelmersh’s existing clay product manufacturing business will create a leading combined group in clay and associated pre-fabricated products, including brick cladding systems and brick clad chimneys and arches.
The enlarged group will have a broader product portfolio with enhanced routes to market, with Fabspeed’s complementary customer base and distribution channels.
The up-front acquisition price represents a multiple of 5.3x Fabspeed’s 2021 EBITDA. The Board believes that the Acquisition is financially attractive and is in line with Michelmersh’s financial performance criteria for value-enhancing acquisitions. The Acquisition will be earnings accretive in the first full financial year after completion, being 31 December 2023, and before the delivery of any revenue or cost synergies.
Fabspeed has a history of delivering organic revenue and profit growth with associated strong cash conversion and delivered a profit before tax of £0.6 million for the 12 months ended 31 December 2021. At the same date, Fabspeed had gross assets of £5.2 million.
The initial cash consideration of £6.25 million on a cash-free and debt-free basis, which is subject to target working capital adjustments, has been paid on completion this morning. The consideration has been satisfied through existing cash resources. There is potential for an additional deferred consideration of up to £2 million, payable in cash, based on achieving future adjusted EBITDA growth targets over the two financial years following completion.