REG - Grafton Group PLC - Platform Acquisition of Salvador Escoda, S.A.

GraftonAnnouncement

30/10/2024 13:30

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RNS Number : 2736K  Grafton Group PLC  30 October 2024

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

 

Grafton Group plc

Platform Acquisition of Salvador Escoda, S.A. in Spain

 

Grafton Group plc ("Grafton" or the "Group"), the international building
materials distributor and DIY retailer, is pleased to announce that it has
acquired the entire issued share capital of Salvador Escoda, S.A. ("Salvador
Escoda") from Escoda Sans, S.L. Salvador Escoda, founded in 1974 by Mr.
Salvador Escoda Forés, is one of Spain's leading distributors of air
conditioning, ventilation, heating, water and renewable products serving
professional installers across the residential, commercial and industrial
sectors.

 

The total consideration payable is a maximum of €132.0 million on a cash and
debt free basis (before leases(1)), with €128.0 million payable at
completion and a further €4.0 million payable subject to financial
performance conditions. Salvador Escoda reported revenue of €231.8 million
and adjusted operating profit on a local GAAP basis(1) of €16.5 million for
the year ended 31 December 2023. Since 2019, the compound growth rate of
revenue has been approximately 9 per cent per annum.

 

The acquisition of Salvador Escoda is consistent with Grafton's strategy of
acquiring platform businesses with strong and unique propositions offering
exciting growth opportunities and which operate in fragmented markets with
strong underlying fundamentals.

 

Spain is the fourth largest construction market in the EU and is forecast to
have one of the fastest growing economies in Western Europe over the period
2023 - 2026(2). The building materials distribution market is highly
fragmented and within this market, Heating, Ventilation and Air Conditioning
has been identified as one of the strongest growth segments partly as a result
of climate change supported by replacement cycle dynamics and a favourable
regulatory environment.

 

Salvador Escoda, headquartered in Barcelona, operates from 93 strategically
located branches throughout Spain which are supported by four distribution
centres, including a new 18,000 square metre facility in Seville which opened
in March 2024. Over the past 50 years, the business has grown to offer a broad
suite of over 100,000 products principally supplying the professional
installer market with both appliances and ancillary products. Over 50 per cent
of its sales comprise high quality private label brands such as Mundoclima in
air conditioning and Escoclima in ventilation. The existing management team
will remain in place, supported by Mr. Salvador Escoda Forés as Honorary
Chair, together with a team of over 750 colleagues.

 

The transaction is expected to be earnings enhancing in its first full
financial year following acquisition and to deliver an attractive return on
invested capital in the medium term. Grafton intends to support Salvador
Escoda in its brand development, ongoing organic expansion and, in due course,
the execution of inorganic opportunities in the fragmented Iberian
marketplace.

 

Commenting on the acquisition, Eric Born, Chief Executive Officer of Grafton
Group plc, said today:

 

"The purchase of Salvador Escoda is an excellent fit with Grafton's strategy
of acquiring platform businesses in new markets which possess strong and
unique propositions with the opportunity to drive further growth and scale. We
see long term structural growth in the Spanish economy and in its fragmented
distribution markets for building and construction products. Salvador Escoda's
leading own brands in categories such as ventilation and air conditioning are
an exciting new adjacent channel for Grafton. We look forward to working with
the highly experienced and successful team to build on their rich heritage and
accelerate what has been an impressive track record of growth.

"In addition to today's announcement, we continue our patient, methodical
assessment of additional organic and acquisition opportunities in our chosen
European geographies, and in particular founder-run businesses, attracted by
Grafton's entrepreneurial pedigree and supportive, decentralised structure."

 

(1) On a post-IFRS 16 (leases) basis, the estimated adjusted operating profit
for the year ended 31 December 2023 was €17.6 million and the estimated
capitalised value of leases at 1 July 2024 was €39.0 million.

 

(2) Source: Euroconstruct 97(th) Summary Report (Summer 2024 Forecast).

 

Ends

 

Conference Call Details

 

A live audio conference call for analysts and investors will be hosted by Eric
Born and David Arnold at 4:00pm (GMT) today. If investors would like to
listen to the conference call, they can do so by clicking on the following
link:

 

https://stream.brrmedia.co.uk/broadcast/6720be41c86085b1bff5b124
(https://stream.brrmedia.co.uk/broadcast/6720be41c86085b1bff5b124)

Analysts will be invited to raise questions during the presentation. A
recording of the call will be available on the Company's website later today.

 

For further information please contact:

 Investors                                   Media

 Grafton Group plc  +353 1 216 0600          Murray         pwalsh@murraygroup.ie (mailto:pwalsh@murraygroup.ie)

 Eric Born          Chief Executive Officer  Pat Walsh      +353 1 498 0300/+353 87 226 9345
 David Arnold       Chief Financial Officer
                                             Burson         GraftonGroup@buchanancomms.co.uk

                                             Buchanan

                                             Helen Tarbet   +44 (0) 7872 604 453

                                             Toto Berger    +44 (0) 7880 680 403

 

About Grafton

 

Grafton Group plc is an international distributor of building materials to
trade customers and has leading regional or national positions in the
distribution markets in the UK, Ireland, the Netherlands, Finland and now
Spain. Grafton is also the market leader in the DIY, Home and Garden retailing
market in Ireland and is the largest manufacturer of dry mortar and bespoke
timber staircases in the UK.

 

Grafton trades from circa 450 branches and has circa 10,000 colleagues
(including Salvador Escoda). The Group's portfolio of brands includes Selco
Builders Warehouse, Leyland SDM, MacBlair, TG Lynes, CPI EuroMix and StairBox
in the UK; Chadwicks and Woodie's in Ireland; Isero and Polvo in the
Netherlands; IKH in Finland and now Salvador Escoda in Spain.

 

For further information visit www.graftonplc.com (http://www.graftonplc.com)

 

MAR Information:

This announcement, as released at 1.30pm on 30 October 2024, contains inside
information for the purposes of Article 7 of the Market Abuse Regulation (EU)
No. 596/2014, which forms part of domestic law in the United Kingdom pursuant
to the European Union (Withdrawal) Act 2018. The person responsible for
release of this announcement is Susan Lannigan, Company Secretary and General
Counsel.

Forward-looking statements

This press release may include forward-looking statements. These
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directors do not undertake any obligation to update or revise any
forward-looking statements, whether because of new information, future
developments or otherwise.

 

 

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