SIG PLC (LSE:SHI), a commercial construction specialist, said it acquired Miers Construction Products (MCP) Limited for an initial cash consideration of £28mln on a debt-free and cash-free basis.
There will be a further contingent cash payment of up to £6.7mln payable subject to performance during the period ending 31 December 2023, along with a deferred cash payment of £1.8mln, with SIG's EPS and operating margin expected to rise immediately as a result of the acquisition, SIG said in a statement.
"MCP is a highly attractive specialist business with a strong brand, a great reputation for quality service, and technical sector specialism and expertise," said Steve Francis, SIG's chief executive.
"These key elements have created a business that has the ability to grow sustainably ahead of the market. MCP illustrates the opportunities to accelerate through acquisition our path to 5% margins in the medium term."
According to SIG, MCP consistently delivers revenue growth ahead of the underlying UK construction market, and despite Covid-19 disrupting both operations and markets, MCP delivered revenue CAGR of around 20% from 2019 to 2021, at £32.3mln in 2019 to £46.7mln in 2021.
As of 31 May 2022, MCP reported unaudited revenue of £55.5mln and adjusted EBITDA of £5.1mln.
MCP's return on invested capital is expected to surpass SIG's weighted average cost of capital in the first year of ownership, and the acquisition will broaden SIG's UK offering in construction accessories and fixings as it is a strong strategic fit with SIG's proven business model.
Shares of the company were trading 0.15% down to 33.75p in London.