Michelmersh Brick Acquires Carlton Main Brickworks
Carlton’s factory, first established in the 1880s, currently manufactures up to 37 million wire-cut brick per year and has a product offering that complements the geography and market segment of Michelmersh.
Michelmersh Brick Holdings plc recently announced that it has acquired the entire issued share capital of Carlton Main Brickworks Ltd. for a net consideration of £31.2 million (aproximately $35.6 million). Carlton is reportedly a regional brick manufacturer operating from a 93-acre site brickwork based in Barnsley, Yorkshire. The factory, first established in the 1880s, currently manufactures up to 37 million wire-cut brick per year and has a product offering that complements the geography and market segment of Michelmersh.
Carlton is being acquired for a gross consideration of up to £38.4 million (~ $43.8 million), which includes the cash balances of Carlton at completion, being £7.2 million (~ $8.2 million). The directors consider the net consideration to the company of the acquisition to therefore be £31.2 million (~ $35.6 million). Carlton reported audited turnover of £13.1 million (~ $14.8 million) and unaudited adjusted EBITDA of £5.6 million (~ $6.4 million) after adding back non-recurring expenses (directors’ emoluments) for the 12 months ended March 31, 2016.
Carlton is expected to increase Michelmersh’s output to over 100 million brick per year, an expected increase of over 40%. Michelmersh is funding the acquisition through the issue of ordinary shares in the company; its own cash resources; and new debt facilities provided by HSBC, including a £20.0 million (~ $22.8 million) term loan, a £6.0 million (~ $6.8 million) RCF and a £1.0 million (~ $1.1 million) overdraft facility.
According to Michelmersh, the acquisition will give it access to new regional markets, provide opportunities for cross selling and product synergies, and increase output efficiency. Other operational synergies are expected to benefit the enlarged group over time. The acquisition is expected to be significantly earnings enhancing in the current financial year and increase the overall operational cash flow of the company going forward.
Michelmersh welcomes the Carlton team to the business and looks forward to building on the significant success already achieved by its dedicated team in Barnsley. The Stephenson family has owned Carlton since the 1970s, and the vendors comprise Oliver and Matthew Stephenson and Derek and John Wilson (deceased). Oliver Stephenson, Carlton’s chairman and major shareholder, will cease to be employed by Carlton but will support the integration of the business into the enlarged group through a two-year consultancy agreement.
Carlton will sit alongside the group’s other brickworks and will continue to manufacture its well-respected range of products. The current managing director, Pat Furr, is retiring from the business at the end of 2017 but will help with the business transfer as the current manufacturing team fall into the group operating management structure that will oversee performance, quarry management, and health and safety. The sales staff at Carlton will continue to serve the existing customer base, but over time will be integrated into the Michelmersh national sale structure to encourage cross-selling of products and widening of the geographical presence of the enlarged group.