Deal between Dutch and French firms boosts Bouygues place in the UK market and enables Leadbitter to strengthen its position
French construction giant Bouygues has become one of the top 20 largest construction firms in the UK after its £38.5m acquisition of a controlling stake in Leadbitter.
Following the deal, announced on 24 December, Bougyues will have a UK business with a turnover approaching £800m.
Bouygues will initially take a 51% stake in the south of England-based construction and affordable housing specialist but will increase its stake to 100% within four years.
Leadbitter chairman and chief executive Bob Rendell, who took over the firm in 1985, will remain in his current role, while Paul Abson will become deputy group chief executive.
A statement accompanying the takeover announcement said: “The additional capacity provided by Bouygues Construction will enable Leadbitter to strengthen its position on value added projects and on new procedures for awarding public contracts.”
With clients wary of potential business failures after the collapse of Connaught and Rok, the financial strength of the larger group could prove beneficial to winning future work.
The move will also bolster Bouygues’ spread of business in the UK and diversify its exposure, reducing risk.
Leadbitter had been up for sale since April 2009, when Heijmans said it wished to focus on its core Dutch market. The weak construction market in the UK after this announcement, as well as a lack of corporate activity in the sector, meant a 20-month wait before a deal was finally executed.
In its financial year ending 31 December 2009, the most recent for which results are available, Leadbitter grew its turnover by 4.5%, to £337m. Its pre-tax profit increased to £11.9m, up from £10m in the 2008 financial year.
Bouygues’ existing UK business had turnover of £442m and pre-tax profit of £27.5m in its financial year to 31 December 2009.
Analysis: Bigger is better
Bouygues’ takeover of Leadbitter highlights the need for strong balance sheets and the capacity to offer financing solutions to both current and potential clients, writes Dave Lowery.
Public and private sector clients want maximum value for money and being able to offer financing solutions or take on more financial risk could be a key differentiator for those contractors willing and able to do so.
Firms with debt, rather than net cash, could find themselves locked out of deals where there are wary clients.
The private sector is expected to provide the bulk of the finance for the government’s £200bn national infrastructure plan so a strong balance sheet is a must for those firms expecting to benefit from this investment.