LONDON, UK: Severfield plc, the market-leading structural steel group, has entered into an agreement to acquire 100% of the share capital of Voortman Steel Construction Holding B.V. (VSCH), an innovative European steel construction group, for a net consideration of €24 million payable in cash on completion. Acquisition is anticipated to be earnings enhancing in the year-ending 31 March 2024.
The acquisition of Voortman Steel Construction Holding, a profitable, cash generative business headquartered in Rijssen, the Netherlands, will provide Severfield with a manufacturing base in Europe to complement its existing European business.
The Board of Severfield Plc believes that VSCH is an attractive acquisition opportunity. It is profitable, cash generative and provides a manufacturing base in Europe, allowing Severfield to benefit from VSCH’s strong reputation in the Netherlands and its growing pipeline of opportunities.
The Board believes that the Acquisition will enhance the Group’s reputation and presence in the European market, building on its existing European business, and will help accelerate Severfield’s European growth strategy.
The acquisition provides Severfield with immediate access to new and attractive market sectors, providing the Group with further market and geographical diversification outside its core UK operations.
Voortman Steel Construction Holding is highly regarded by its clients and the Acquisition presents Severfield with a number of opportunities for further profitable growth, including access to a wider European client base and a platform to offer a wider range of services to its existing clients.
VSCH is renowned in the Netherlands for its in-house knowledge, innovation and expertise. The business is well invested with modern and highly efficient production facilities, generating output of c.15,000 tonnes per annum, and is co-located with Voortman Steel Machinery Holding B.V. (‘VSMH’), a manufacturer of steel fabrication machinery.
The acquisition will allow for areas of future collaboration with VSMH including the development of ‘robot’ production technology, proprietary fabrication software and bespoke equipment. The Acquisition will also enable Severfield Plc to leverage VSCH’s local knowledge to assist with the growth of its existing European business.
VSCH primarily operates in the Dutch market with an addressable value of c.€1.3 billion per annum, which is expected to grow. It mainly serves the industrial, commercial and residential subsectors. The underlying market growth is being driven by private sector investment in new assets and significant government backed investment.
VSCH has a well established, leading position in the Dutch market commanding a c.5 per cent market share with no single competitor having more than a c.10 per cent market share. VSCH has the capacity and resources to compete for larger, more complex, higher value projects, and its scale and market position presents opportunities for further growth in the Netherlands and into neighbouring EU countries.
The Acquisition also provides Severfield with access to the fast growing Dutch electricity distribution market.
Alan Dunsmore, Chief Executive Officer commented: “Severfield has been growing and developing its European presence over recent years and the acquisition of VSCH will help the Group continue to deliver on its growth strategy. VSCH is highly regarded in the Netherlands delivering a quality service to its large European customer base and has been growing its capabilities in the high growth electricity distribution sector and through new design and build (turnkey) solutions.
We believe that the combination of Severfield and VSCH will result in a broadening of our service offering and an ability to grow in different sectors and geographies. Not only is the acquisition of VSCH anticipated to be earnings enhancing in its first full year of ownership, the transaction will further cement our position in a growing European market and provide opportunities for further profitable growth.
We look forward to working with the VSCH management on building new business opportunities together and driving future growth from within the combined Group.”