Cenkos has concluded Brickability Group PLC’s (LON:BRCK) £63mln acquisition of timber and cladding distributor Taylor Maxwell “significantly short-circuits the group’s medium-term targets of reaching £500m of revenues and £50mln EBITDA and potentially heralds a new era of growth”.
The City broker also reckons the earnings enhancing deal “deepens and hardens” its strong position in UK brick factoring and merchanting, while continuing to build on the strategy of product diversification and increasing average customer wallet size.
“On many levels, Taylor Maxwell is a super acquisition for Brickability and one that should be welcomed by investors who have seen the shares increase by 50% since IPO in July 2019 and more emphatically so post the difficult COVID period,” it said in a note to clients.
Cenkos added that Brickability’s biggest purchase to date provides “instant” earnings per share accretion of 25% with the potential to stretch to 34% on some speculative medium-term synergy benefits.
The broker reckons the shares are worth 125p each, or around a quarter more than the current price.
Earlier, Brickability said the acquisition of Taylor Maxwell, a supplier of timber and non-combustible cladding, would be part-funded by an oversubscribed £55mln share placing.
A total of £40mln will be handed over in cash and £10mln will be satisfied by issuing shares. There will also be a deferred element based on future profitability.
Brickability, one of the UK’s largest construction materials distributors, said the Taylor Maxwell acquisition will be earnings accretive, while it also helps diversify the company’s product offering.
It is the company’s 11th purchase since 2018, though it is one that has been in the pipeline for some time, according to chief executive Alan Simpson.