Renew makes £7.9m acquisition
YORKSHIRE engineering services group Renew Holdings has acquired Lewis Civil Engineering for £7.9m.
Following record results earlier this year, Renew said its presence in the environmental market will be “significantly strengthened” by the acquisition of Lewis, which is based near Cardiff.
Leeds-based Renew’s engineering services business focuses on the key markets of energy (including nuclear), environmental and infrastructure. It accounts for over 70% of group revenue and 80% of operating profit. Renew also operates a specialist building division.
Roy Harrison, chairman of Renew, which operates in UK infrastructure markets including working at the Sellafield nuclear power station and maintaining railway lines, said: “Renew’s presence in the environmental market will be significantly strengthened by the acquisition of Lewis. This acquisition accords with the group’s clear strategy of growing its engineering services business in sustainable markets, where it can secure strong framework positions with major clients focusing on areas of non-discretionary spend.”
The deal has been funded from the group’s cash resources and overdraft facilities provided by HSBC’s Yorkshire corporate team and is Renew’s first acquisition since it bought Amco in February 2011. The consideration includes £0.6m in respect of two freehold properties used by Lewis.
Lewis was founded in 1984 and specialises in the construction and maintenance of infrastructure and assets within the water industry. Clients include Wessex Water and Dwr Cymru Welsh Water and it employs 175 people. In the environmental sector, Renew has now added Lewis to its existing specialist Water business, Seymour, which has framework agreements with Northumbrian Water.
In the year ended July 31 2012, Lewis reported an operating profit of £1m on turnover of £20.4m. For the year ended July 31 2013, Lewis is expected to record an increase in turnover of approximately 20% and to maintain its operating profit margin percentage.
Martin Jenkins and Barry Jackson from Deloitte’s corporate finance team in Leeds initially identified Lewis as a strong potential strategic fit and introduced the opportunity to Renew.
Jackson said: “Over the last two years, Deloitte has been working extensively with Renew to further its acquisition strategy, and we are pleased to see this important acquisition come to fruition.
“Much is made of the challenging economic climate but we are sensing an increased desire for growth and deal-making across the region. We identified the potential for this acquisition as a great fit for Renew’s strategy of growing its engineering expertise in long-term, sustainable markets.”
Legal advice was provided to Renew by Lupton Fawcett Lee & Priestley.
HSBC’s deputy head of corporate for Yorkshire, Mike Swift, said: “Renew is a company we have worked with since 2010 and during this period we have funded two acquisitions. It is an acquisitive company with both a strong business model and management team and we have been pleased to have been able to support the firm with its purchase of Lewis Civil Engineering.
“We are generally seeing an increase in activity from corporates in the Yorkshire region across a number of sectors. Whilst it is too early to say that confidence has fully returned, this is a positive development and will hopefully feed through to a strengthening Yorkshire economy.”
The deal was led on behalf of the bank by senior corporate banking manager Neil Abbott.
Lewis was 80% owned by Mrs J Lewis, who has resigned from the board at completion of the transaction.
David Boden, managing director of the firm, who owned the remaining 20%, continues in that position following the acquisition, having entered into a new two year service contract and will report to Renew’s engineering services director, Paul Scott.
