Another purchase is expected before July. YJL chief executive Roger Feast said it was likely to be a construction company operating in “a slightly different sector”, possibly quoted on the stock market. “The one or two we are looking to acquire also have manufacturing arms,” he said.
The 71p-a-share cash offer for Britannia was a 43% premium on the share price on 25 February. Britannia has a £59m turnover and operates in the South-west, where YJL has no presence. The Cheltenham-based business employs 180 people in its construction division and shares a number of clients with YJL, including Tesco. It also has a 40-strong mechanical manufacturer and installer called WF Knight; a Yeovil-based concrete manufacturing business called Birchwood; and a number of property interests. All the businesses will keep their established names.
Britannia made a pre-tax profit of £941 000 for the six months to 30 June 1999. This was down from £1.5m a year earlier because of delays securing construction orders.
Few redundancies are expected as a result of the deal, but Britannia’s main board directors will all leave. They are chief executive Michael Nelmes-Crocker, who is 63; 50-year-old finance director Alan Barker; and non-executive chairman Christopher Powell.
Nelmes-Crocker said “frustration” with the company’s poor market valuation had been the main reason for selling to YJL. “This is a result of being a small quoted company operating in a sector that is out of favour,” he said. “You end up scratching your head about what you’ve got to do to deliver the value shareholders want. We’d thought of everything and the beauty of this deal is that the businesses are so complementary.”
YJL, formerly YJ Lovell, has turned its fortunes around since the £15m disposal of its social housing business to Morgan Sindall last year. It achieved pre-tax profit of £8.5m for the year to 30 September 1999.
Feast replaced long-standing chief executive David Heppell in October and was given a brief to make acquisitions. The strategy could involve buying smaller quoted firms whose shares have been undervalued.