Kier expands residential business through £53.3m acquisition
One of the region’s largest construction firms, the Kier Group in Bedfordshire has acquired Lincolnshire-based housebuilder, Hugh Bourn Developments, for £53.3 million.The acquisition forms the foundation for a fifth division within Kier’s residential business, expanding the group’s reach to the north of Allison Homes’ existing operations.
Kier Residential subsidiary, Kier Homes Northern, undertook the acquisition, which covers the entire issued share capital of Hugh Bourn from the Bourn family representing the market value of land, work in progress and other assets and liabilities.
The consideration for which will be funded from Kier’s cash balances and banking facilities with £20m paid on completion and the balance due in equal instalments on 2 July 2007 and 1 July 2008.
Hugh Bourn is a well established regional housebuilder having operated in Lincolnshire for over 30 years and will form the foundation for a fifth division of Kier Group’s residential business, expanding its reach to the north of Allison Homes’ existing operations.
The majority of the 1,197 residential plots acquired with the business benefit from a combination of outline and detailed planning consent and include a small number of built and partially built units. In its first year Hugh Bourn is expected to trade from 21 trading outlets and is expected to be earnings enhancing to the Group.
John Dodds, Kier’s chief executive, said: “Buying land off market in this way has proved very successful in past acquisitions and I anticipate that this transaction will provide a return on our investment in the first year.
“This acquisition provides us with an excellent opportunity to further expand our housing division by providing the basis for a new region to complement our four existing, successful, regional housebuilding businesses.”
Hugh Bourn Developments disclosed a profit before tax for the year ended 31 March 2006 of £4.2m based on the historic book value of land. At 31 March 2006 the gross assets of the firm were £29.9m.