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Sat July 02 2022

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Breedon to buy £178m slice of Cemex

8 Jan 20 Construction materials group Breedon has entered into a conditional agreement with Mexican cement giant Cemex to take over substantial UK assets and operations for £178m.

Breedon is taking over 49 ready-mix plants, 28 aggregate quarries, four depots, one cement terminal, 14 asphalt plants and four concrete products operations. Parts of Cemex’s Paving Solutions business in the UK are also included in the sale to Breedon.

Breedon is taking over approximately 100 Cemex UK operations across six divisions in Scotland, Wales, northeast England, Norfolk, the East Midlands, and Yorkshire.

The acquisitions will increase Breedon’s mineral reserves and resources by approximately 170 million tonnes – or enough to last more than 27 years at current extraction rates.

However Cemex will retain a substantial business in the UK, encompassing cement production, ready-mix concrete, aggregates, asphalt and paving solutions.

In 2018 the Cemex UK’s assets being acquired generated revenue of £178m and EBITDA of £23m.

Breedon has agreed to pay £155m in cash and assume £23m of lease liabilities.

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

Cemex UK includes the Rugby Cement brand.

Breedon group chief executive Pat Ward 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.

“In addition to the cost synergies we anticipate, we also expect the deal to be accretive to both earnings and free cash flow in the first full year, with a positive ongoing impact on the cash generation of the enlarged group.”

Cemex chief executive Fernando Gonzalez said: “This transaction further rebalances our portfolio into our core markets, enhances our profitability, and enables us to continue to focus on deleveraging. We believe the valuation of this transaction is in line with our other recent divestments considering the type and return of the assets sold.”

Proceeds of the sale will be used mainly to reduce Cemex’s debt.

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