Ray O’Rourke has also signed a five-year deal with Bison’s new owner Forterra
Laing O’Rourke has sold its precast concrete business Bison Manufacturing to building products manufacturer Forterra for £20 million.
The two firms have also formed a five-year partnership which will see Laing O’Rourke continue to use Bison products on its projects.
Ray O’Rourke, chief executive of Laing O’Rourke, said the growing demand across the residential, commercial and infrastructure sectors for manufactured products made this the “right time” for the sale.
“We acquired Bison at the height of the global financial crisis, saving hundreds of regional jobs and allowing the manufacturer’s rich history to continue. Now, this collaborative and future-focussed deal will provide enhanced value to Laing O’Rourke, Bison and Forterra,” he said.
“This partnership is part of our commitment to build a more collaborative industry centred on high-quality, off-site modular construction,” he added.
Forterra is to fund the acquisition from its existing cash balances and expects the sale to complete in the third quarter of this year.
The firm said the acquisition provided it with the opportunity to take a leading position in the UK precast concrete market whilst also expanding its capacity-constrained business.
Founded in 1919, Bison had been part of Laing O’Rourke’s manufacturing portfolio since 2008. Its automated manufacturing facility at Swadlincote in Derbyshire opened in 2006 to provide a range of bespoke precast concrete products.
Forterra said that the plant has been operating at “a little more than 50% capacity utilisation”.
It added that Bison had made a loss of £1.1m on earnings before interest, taxes, depreciation and amortization, revenues of £22.8m and a net book value of £10m for the year ended 31 March 2017 according to the financial statements of Laing O’Rourke.
However, Forterra expects to be able to more than make back the cost of the acquisition by 2019 through efficiency improvements, proposed consolidation of production between sites and leveraging procurement synergies.
Stephen Harrison, chief executive at Forterra, said: “The acquisition is a unique opportunity to transform Forterra’s precast business in terms of scale and capability.
“We are acquiring well invested assets whilst at the same time solving the capacity constraints on growth within our own business. We gain a well-respected brand and will attain a market leading position as we look to grow the combined business,” he added.
“We are confident that the acquisition will create value for our shareholders”.