business

Severfield Acquires Steel Fabricator DAM In £12m Deal

Severfield, the Thirsk-based listed structural steel group has signed an agreement to acquire DAM Structures Limited, a steel fabrication company for a net initial consideration of £12m.

As part of the deal, a further maximum deferred consideration of £7m is payable in 2022, together with a performance-based contingent consideration of up to £8m, which would be payable over a five-year period.

Alan Dunsmore

Alan Dunsmore, chief executive officer at Severfield, said: “This is a very exciting, highly complementary acquisition which will help the Group continue to deliver on its strategic growth objectives.

Deal Highlights:
The Acquisition will give Severfield immediate access to attractive, complementary market sectors with strong growth potential including the propping, railway and steel piling markets. Combining the businesses will enhance Severfield's position as the UK's broadest structural steel services group.
The Acquisition will provide the Group with new clients from which to grow its existing services and gives Severfield a platform to widen its supply chain into its existing client base.
For the twelve months to 31 October 2019, DAM Structures recorded audited revenues of £22.3m and a profit before tax of £1.9m. The value of the gross assets as at 31 October 2019 was £14.2m.
The Acquisition consideration will be funded by a combination of cash reserves and a term loan.
The Acquisition is anticipated to be earnings enhancing in its first full year of operation.

“DAM Structures will provide us with access to existing and new customers earlier in the construction process, as well as access to new market sectors with strong growth potential including the growing rail electrification sector.

“It has an established client base and proven track record of delivering quality services and will fit in well with the Severfield culture and team.

“We look forward to working with the DAM Structures management team on building new business opportunities together and driving future growth from within the combined Group.”

The acquisition consideration will be funded by a combination of cash reserves and a term loan.

The vendors were advised by a team from the Leeds office of Grant Thornton led by Corporate Finance Director Duncan Morpeth supported by Jim Whittaker, John Whitney and James Boreman

The firm’s also provided tax advice led by Douglas Tailby and Josh Smailes.

Martin Frost, corporate partner at law firm Andrew Jackson Solicitors LLP, assisted by commercial property partner Helen Mellors and corporate assistant Liam Hessay also advised DAM.

Advisers to Severfield plc included Gordons (legal): James Fawcett and PWC: Will Oxley, Ben Ferguson, Nicholas Breeze