£2bn-turnover group buys struggling construction materials firm

A £2bn-turnover building materials group has bought a four year-old Rotherham firm effectively controlled by Finance Yorkshire in a deal worth £3.3m.

Grafton Group paid £1.4m cash and assumed debt of £1.9m to take full ownership of Carlton Manufacturing, which develops and manufactures sustainable construction materials.

Carlton was founded by entrepreneur Max Smith, his brother Guy and finance director Chris Blaxall in 2011, and was supported by £1.2m funding from Finance Yorkshire delivered in two phases.
Seedcorn funding for £400,000 was provided in March 2012, with a further £800,000 from Finance Yorkshire’s seedcorn and equity funds supporting Carlton’s 2013 move to its current location in Goldthorpe, Rotherham.
However the company struggled to trade profitably and its last published accounts, for 2013, included a going concern warning as shareholders’ funds showed a deficit of £460,000. Carlton’s unpublished accounts for 2014 show an operating loss of £500,000 on revenues of £3.3m. 
Further investment of £200,000 was provided by Finance Yorkshire in June 2014, half of which came in the form of preference shares. The funder’s shareholding increased to 49.6% while the three founders owned the rest of the company, with Max Smith holding 27.1% and his two fellow directors having 11.6% each.
The acquisition by Grafton Group was completed in July. Its other interests in Yorkshire include Featherstone-based Frontline Bathrooms and CPI Mortars, which has a regional site in Castleford.
A spokesperson for Finance Yorkshire confirmed it had fully exited Carlton but said it was bound by confidentiality agreements.

 

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