- Monday, February 24, 2025
In a $300 million transaction, mostly in cash, the company is acquiring BMC of St. Louis, Missouri,
By: Shubham Ghosh
BREEDON, the UK’s biggest independent aggregates group overseeing the largest cement works in Hope, Derbyshire, is set to venture into the US construction materials market, The Times reported.
In a $300 million (£235 million) transaction, mostly in cash, the company is acquiring BMC of St. Louis, Missouri, entering America’s Midwest.
The deal, which includes $15 million (£11.7 million) in Breedon shares for the selling family, which has managed BMC since the 1960s. It also coincides with the infrastructure expansion under the Joe Biden administration.
“This is the Goldilocks transaction we have been talking about,” Rob Wood, Breedon’s chief executive officer was quoted as saying by The Times about a deal to expand into the US for the first time, a strategic ambition that was reported by The Times last summer.
“This is the right beachhead at the right value with the right management team. This is not a one-off.”
Wood mentioned that Breedon is keen on pursuing additional deals in the US and sees great potential in the Midwest.
Despite significant demographic migration to the region and a demand for residential and infrastructure development, the Midwest isn’t among the “big four” states where Breedon might have anticipated tougher competition. The selling McKean family, it is understood, lacked both successors to carry on the business and resources for expansion. BMC’s management will continue to assist in Breedon’s planned expansion in the US.
Breedon’s entry into the US market marks a significant milestone for a company that emerged just 15 years ago. After disrupting the dominance of CRH, Cemex, Heidelberg and Holcim in Britain and Ireland through a series of domestic acquisitions, Breedon followed the footsteps of other big firms such as Balfour Beatty and Ashtead to the American construction market.
The acquisition boosts Breedon’s revenues by 10 per cent and operating profits by 18 per cent. The deal, alongside the announcement of better-than-anticipated full-year results and a sudden increase in the dividend, propelled Breedon shares up by over seven per cent, reaching a two-year peak of 408p, up by 28p. This surge values the company at nearly £1.4 billion, after its recent transition to the FTSE 250 from the secondary Aim market in 2023.
Despite sluggish activity in the UK construction sector, Breedon managed to achieve a seven per cent revenue growth to £1.48 billion by implementing price adjustments. Although pre-tax profits slightly decreased to £134 million, analysts anticipated a more significant decline.
“The near-term outlook remains uncertain [but] the markets we serve, particularly infrastructure and housing, are supported by long-term structural deficits with spending ambitions that are upheld by cross-party government support in the UK and Ireland, where I am further encouraged by the recent progress in Stormont,” Wood said of the current trading.
