- Saturday, April 27, 2024
British Indian entrepreneur Amit Bhatia serves as the non-executive chairman of Breedon
By: Pramod Thomas
ONE OF THE UK’s leading construction materials firm, Breedon Group, has acquired US-based BMC Enterprises for £238.1 million to bolster its presence in the American market.
This acquisition marks Breedon’s first entry into the US building materials industry.
British Indian entrepreneur Amit Bhatia serves as the non-executive chairman of Breedon, overseeing operations, which include the UK’s largest cement works located at Hope in the Derbyshire Peak District.
Describing the purchase as a “compelling opportunity” within a “fragmented and expanding” market, Breedon said BMC was an appealing, established enterprise poised for further growth.
The latest move will help the company establishing a group platform in the US, complementing its businesses in the UK and Ireland.
BMC, based in St. Louis, Missouri, is owned by its president and CEO, Nathan McKean, and entities closely affiliated with him.
The primarily cash transaction grants the McKean family $15 million in Breedon shares.
On completion of the deal, McKean will assume a non-executive advisory role within Breedon’s north American operations.
Breedon CEO, Rob Wood, said the firm looks forward to collaborating with BMC to expand its presence in the US.
“The acquisition of BMC represents a compelling opportunity for Breedon to launch our third platform in the USA. BMC has an excellent performance track record over a sustained period and is positioned in an attractive market for future growth,” Wood said.
“The acquisition is expected to be earnings enhancing for shareholders, while allowing Breedon to maintain a conservative and flexible balance sheet to pay dividends and make further bolt-on acquisitions across each of our platforms as opportunities arise.”
Breedon’s expansion into the US market marks a significant milestone for the company.
This move follows its successful disruption of the dominant market presence of major multinational companies like CRH, Cemex, Heidelberg and Holcim in the UK and Ireland, achieved through a series of domestic acquisitions, reported The Times.
Joining other prominent UK firms such as Balfour Beatty and Ashtead in venturing into the US construction sector, Breedon follows in the footsteps of Hanson.
Bhatia was chairman and founder of Hope Construction Materials, the UK’s largest independent cement aggregates and concrete company.
He was executive chairman of Hope Construction Materials, until it was acquired by Breedon Group in August 2016 when he joined the board.
He was appointed deputy chairman in April 2018 and non-executive chairman in May 2019. Bhatia is also chair of the nomination committee and a member of the sustainability committee.
According to reports, the acquisition contributes around 10 per cent to Breedon’s revenues and 18 per cent to its operating profits. Alongside the announcement of better-than-expected full-year results and a significant dividend increase, Breedon’s shares surged by over 7 per cent, reaching a two-year high of 408p.
This places the company’s value at nearly £1.4 billion, having joined the FTSE 250 index last year after transitioning from the secondary AIM market.
Breedon reported a seven per cent revenue increase to £1.48bn, attributed to passing on price hikes. Pre-tax profits saw a slight decrease to £134m.
Breedon holds an extensive reserve of mineral resources totalling one billion tonnes, ensuring long-term availability. This enables the company to provide an array of value-added products and services, encompassing specialty materials, surfacing, and highway maintenance solutions, catering to diverse customer needs.
