Breedon will fund the purchase by a combination of a new £150m term loan, a new £350m revolving credit facility replacing an existing £300m revolving facility and a £170m equity placing.
The addition of Lagan Group, Breedon’s largest acquisition to date, will spread its reach across the island of Ireland and significantly increase the scale of Breedon’s existing contract surfacing operations.
Lagan has a cement plant in Kinnegad in Westmeath, nine active quarries, 13 asphalt plants and nine ready-mixed concrete plants. Lagan generated revenues of £249m in 2017 and EBITDA of £46m. In the same period Breedon generated revenue of £652m and underlying EBITDA of £117m.
Confirmation of the deal comes two months after Breedon disclosed that it was in takeover talks with Lagan, one of the largest private companies in Ireland. Lagan Group includes the Whitemountain contracting and materials group, but not Lagan Construction Group, which was hived off in 2010 under the ownership of a different branch of the Lagan family, under Michael Lagan. The Lagan Group being courted by Breedon is headed by his older brother Kevin Lagan, aged 68.
Breedon executive chairman Peter Tom said: “Over the last eight years we have pursued a successful buy-and-build strategy which has established Breedon as the largest independent construction materials business in the UK and the acquisition of Lagan is another strategic step for us. We believe it has the potential to add significantly to the group’s performance and prospects and we are looking forward to working with our new colleagues to deliver further value for our investors.”
Breedon group chief executive Pat Ward added: “Lagan represents a unique opportunity to enter a growing market with immediate scale and excellent opportunities for expansion. It significantly strengthens our cement offer, adds to our mineral and downstream resources, brings us a bitumen import/export business and adds real weight to our contract surfacing operations.
“Lagan is well-run, well-invested, with an experienced management team and a strong track record. Its culture is complementary to our own, with a sharp focus on customer service, a first-class workforce and a commitment to safety, which is a key priority for us. From a strategic perspective, it provides us with a stronger platform from which to pursue further organic growth and bolt-on acquisitions.”
Lagan Group chairman Kevin Lagan said: “I’d like to thank our committed and passionate staff for the role they have played in the growth of Lagan Group and I wish them every success as they enter an exciting new chapter with Breedon, who I am confident will build on that success, supporting the development of the business in the years ahead.”
The enlarged group will have: two cement manufacturing plants, 69 quarries, 39 asphalt plants, approximately 200 ready-mixed concrete and mortar plants, six import/export terminals, eight rail-fed depots and four contract surfacing businesses.