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9 May, 2007 - 11:27 By Staff Reporter

Rok acquires Midlands company

The Milton Keynes-based building, maintenance and development company, Rok plc, is continuing its expansion drive into new geographical territories with the £21 million acquisition of Midlands development firm, SOL Construction.

The Milton Keynes-based building, maintenance and development company, Rok plc, is continuing its expansion drive into new geographical territories with the £21 million acquisition of Midlands development firm, SOL Construction.

The firm has increased its coverage in the North of England and Scotland – where it paid £31.3m for Tulloch Construction – and has stated a desire to grow its presence in the Midlands where it already operates through Birmingham.

The acquisition will help facilitate this significantly by integrating SOL Construction and its 410-strong workforce who operate out of offices in Nottingham and Warwick, pushing it to its stated ambition of becoming the “Nation’s Local Builder.”

Rok’s chief executive, Garvis Snook, said: “The Midlands region has been a key target area for Rok for some time. SOL is a highly regarded business in this marketplace and we are delighted that the SOL team has agreed to join Rok.

“Importantly, it further expands our own labour force where our preference for direct delivery of services is key to customer satisfaction and margin growth. The acquisition will enable SOL to expand in the Midlands marketplace through its access to the resources and services that Rok can offer.”

SOL was founded in 1967, and operates in the Midlands where it provides construction, building and both planned and response maintenance services to a wide range of customers. 251 of its 413 employees are tradesmen operating in the maintenance division.

In the year ended 31 March 2006 the divisions of SOL subject to the acquisition reported pre-tax profits of £2.8m and are expected to report pre-tax profits of £2.7m for 2007. Net assets of SOL at completion will be £7.0m which includes £7.0m of free cash.

The initial consideration for the acquisition – which does not include SOL’s house building division, SOL Homes – is £19.0m and will rise to a maximum of £21.0m dependent upon the financial performance of SOL for the year to 31 March 2008.

The initial consideration is made up of £15.0m in cash funded from existing bank facilities and £4.0m in Rok shares, the sale of which are restricted for a two year period. The remaining performance related payment will also be paid from existing bank facilities.

SOL managing director, Adrian Whiteside, said: “SOL has operated in the Midlands area for almost 40 years and during that time has built an enviable client base and a reputation for providing an excellent service, which we are confident will be further enhanced as part of the Rok organisation.

“Of equal importance to the business benefits, are the opportunities this will present to our workforce, who have loyally supported us over the years. They have played a major part in the success of SOL Construction and we are sure this will continue as part of the Rok Group.”

Rok’s shares dropped 80 per cent in what was actually a testament to its success after the company decided to make a five-for-one share split to counter an 88 per cent rise in its share value over 2006. Rok said its shares had reached a level which could impair their marketability and liquidity.

The split saw Rok’s share price fall by a factor of five but, as each shareholder will hold five times more shares, the value of each shareholding and of the company will not be affected.

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