Opencast firm takes over CA Blackwell

Hargreaves will pay £8.5m in net cash and leave Blackwell’s head office in Earls Colne, Essex, in the hands of the vendors. This property is valued at £3.35m.

Blackwell has been operating in bulk earthmoving, civil engineering and plant hire for more than 50 years. It also operates a number of mining and quarrying services contracts, making it complementary to Durham-based Hargreaves’ coal production and distribution businesses.

Hargreaves chief executive Gordon Banham said: "The acquisition of Blackwell extends the reach of Hargreaves into the UK earthworks and civil engineering sector bringing further diversification to the group and offering an attractive return on capital. The business is complementary to and synergistic with our existing mining operations and offers flexibility with our existing fleet of heavy plant, providing further opportunities to diversify the group's operational focus.

"We are delighted to welcome the Blackwell team into the group and look forward to combining our expertise to work with them on the growing market opportunities in the UK, including the enhancement and renewal of the nation's critical infrastructure."

Based on unaudited management accounts and forecasts, in the year ended 31st December 2015 Blackwell is expected to report an operating profit of £3.3m on £89.0m of revenues. Included within these amounts are £1.2m of operating profit and £12.2m of revenue relating to exceptional non-recurring activity. Excluding these exceptional non-recurring profits, adjusted Ebitda for the period is expected to be £4.1m.

Net assets of Blackwell at the date of acquisition after the disposal of the Earls Colne property are expected to be approximately £10.9m. Net debt is £13.0m, giving a headline enterprise value of £24.9m.

Of the £8.5m net cash payment to be made by Hargreaves, £5.25m will be held in escrow pending the settlement of a number of historic claims and the realisation of proceeds from the disposal of two other investment properties, which will be marketed post-acquisition and have a book value of £6.5m. These property disposals are expected to be completed by 31st December 2016.

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