Severfield – 71.1p

1 October 2019 – acquisition

Leading structural steel group Severfield has announced an agreement to acquire 100% of the share capital of Harry Peers & Co Limited, a leading full-service structural steelwork business, for a net initial consideration of £18.0m payable in cash on completion.  A performance-based deferred consideration is in place, which could increase the purchase price by up to £7.0m.  This would be payable in late 2020.  The deal will significantly expand and extend Severfield’s current capabilities into nuclear, process industries and power generation.  Combining the businesses will enhance Severfield’s position as the UK’s broadest structural steel services group.  In the 12 months ended 30 April 2019 Harry Peers achieved audited revenues of £21.2m and profit before tax of £3.4m.  The value of gross assets as at 30 April 2019 was £24.0m.  The acquisition will be funded by a combination of cash reserves and a term loan.  It is anticipated to be earnings enhancing in its first full year of operation and looks to have been completed on attractive terms.  We keep our BUY rating.

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