Merger and acquisition (M&A) activity in the construction sector intensified before today’s Budget, with multiple deals announced.
These include CN 100 firms, a Nordic cladding group and an AIM-listed housebuilding specialist.
One expert told Construction News that he believed “100 per cent” that the flurry of M&A activity reflects concerns among businesses that capital gains tax (CGT) will be increased in today’s Budget.
Chris Davies, managing director of surety broker DRS Bond Management, said any rise in CGT “shouldn’t have an impact until 6 April 2025 – but there is such a thing as retrospective legislation. And there is a genuine concern about what Rachel Reeves is going to say in the Budget, because capital gains tax is one of the few levers that the government can pull if they’re not going to go after personal taxation.
However, in a recent opinion piece, lawyers from Faegre Drinker Biddle & Reath argued that the construction sector was due a rebound in M&A activity following a recent lull.
And today’s news seems to back this up. As reported by CN, Vinci has agreed a deal to acquire fellow CN100 contractor FM Conway for an undisclosed sum.
Subject to regulatory approval, the deal is expected to complete in early 2025.
Also today, United Living announced it had snapped up PiLON, a social housing property services firm that operates across London, the South East and Midlands.
The financial terms of the deal were not disclosed.
United Living was one of the big climbers in this year CN100 ranking of contractors, rising from 61st to 38th place with turnover of £534.2m in its latest accounts to 31 March 2023.
PiLON will operate independently, enhancing United Living’s existing property services capacity.
Swedish cladding firm Fasadgruppen, meanwhile, has moved into the UK market after acquiring facade design and installation firm Clear Line in a deal worth up to £119.9m.
In its announcement, Fasadgruppen said the UK was one of Europe’s largest markets for building envelope work and has a “high degree of fragmentation”, making it a useful complement to the group’s Nordic operations.
Fasadgruppen chief executive Martin Jacobsson said Clear Line had “a proven business model that has built an excellent market position in its clear niche and thereby achieved an attractive financial profile”.
Meanwhile, Nexus Infrastructure announced in a stock market update this morning it had acquired civil engineering contractor Coleman in a deal worth up to £5.38m.
Sussex-based Coleman, established in 2000, turned over £8.3m in the year ending 31 March 2024. It works mainly in the water, rail, highways and marine sectors and has spots on several long-term frameworks, including the water industry’s five-year AMP programmes.
The acquisition would allow Nexus, whose main market is residential housebuilding, to expand into sectors critical to the UK’s national infrastructure, the firm said. “These sectors have multi-decade horizons and are less prone to short-term economic pressures,” it added.
Further north, Midlands-based contractor MCS announced today it had sold a majority stake to a London-based investor. RD Capital Partners acquired an 80 per cent stake in the £112m-turnover business, which employs more than 60 staff.
The acquisition marks the first foray into main contracting for RD Capital Partners, whose portfolio also features window firm Majestic Windows, rail specialist Alma Rail and electrical distributor Worcester Electrical Distributors.
MCS chief executive Keir Edmonds and the senior management team will stay on with the business and retain shares.
Edmonds said: “This deal gives surety for our staff and clients that we will be moving forward on the same path that has delivered strong results – especially in recent years when the sector has been especially volatile.”
CN also reported this week that insulation giant Rockwool has snapped up external insulation manufacturer Wetherby Building Systems and that ground engineering contractor Van Elle has bought a Scottish piling specialist for £3.5m.
