Firm cuts ties with contracting roots after 140 years
Henry Boot is selling its £50m turnover construction business to its management for £4m, ending a near 140 year link to its contracting roots.
The firm said the move “simplifies the group structure and reduces the risk profile” meaning it will now concentrate on property and land development along with housebuilding.
The new owner of Henry Boot Construction (HBC) is called PWS Construction which Boot said had been formed by the construction business’s existing management team. The deal is expected to be completed by the end of the year.
Explaining its decision, Henry Boot said: “Having considered a variety of options for HBC, including both alternative exit routes and retaining the division within the group, the Board has concluded that the interests of shareholders will be best served by disposing of HBC to PWS at a price in excess of its net assets.”
The deal is being funded by a £4m loan from Henry Boot which will run for five years with interest charged at 2.1% over the Bank of England base rate.
It added: “Additional consideration is potentially payable to the group in the event that PWS sells all or a material part of HBC within eight years of completion. There is also an overage provision providing a profit share to the group should HBC achieve a net margin in excess of 3% over the next five years.”
Henry Boot said two of its management team will sit on the construction board as part of a “transitional services agreement”.
The firm said this input will continue “until the point when the vendor loan note has been repaid”. It added: “Personal guarantees have been given by the HBC management team, with appropriate restrictions on remuneration in line with group policy.”
The construction business, which has been going since 1886 and worked on temporary harbours for the D Day landings in the Second World War, will be led by the existing construction leadership team of managing director Lee Powell, finance director James Smith and commercial director Chris Weathers.
Henry Boot Construction had a turnover of £49.7m last year and made an operating loss of £2.7m.
But the firm said the business, which, according to its annual report, employed 124 people last year out of the wider group’s 520 staff, has secured 94% of its workload for this year and was expected to break even.
Henry Boot chief executive Tim Roberts said: “The sale of HBC which we are announcing today allows Henry Boot to further its strategic focus on high quality land, prime property development and premium homes. It also enhances prospects for long term growth with a more focussed portfolio of activities with greater synergies.”
Meanwhile, Henry Boot said turnover in the six months to June was up 19% to £126m which it put down to land and property sales. Pre-tax profit more than doubled to £7.8m.
No comments yet