Structural steel specialist sold in £30m deal

A Bolton steel firm has been sold in a deal valued at £30m.

Harry Peers & Co, a structural steelwork business within the nuclear, process industries and power generation sectors as been bought by Yorkshire based Severfield.

Severfield has entered into an agreement to acquire 100% of the share capital of Harry Peers & Co a leading full-service structural steelwork business.

The deal is for a net initial consideration of £18m payable in cash on completion.

A performance-based deferred consideration is in place, which could increase the purchase price by up to £12m, which would be payable in late 2020.

The acquisition will significantly expand and extend Severfield’s current capabilities into attractive complementary market sectors: nuclear, process industries and power generation.

For 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 the gross assets as at 30 April 2019 was £24m.

The acquisition consideration will be funded by a combination of cash reserves and a term loan.

The board of Severfield believes that the long-term investment profile of Harry Peers’s key market positions in the highly regulated markets of nuclear, process industries and power generation, enhances its areas of expertise and broadens its market exposure.

With the scale and capabilities of the group, there are substantial opportunities to grow Harry Peers through a number of combined operational initiatives such as new business development functions for Harry Peers, European contract opportunities, and investment in technology-driven enhancements.

Harry Peers has also demonstrated capability in modular structural steel offerings, which Severfield will look to develop across its wider product range.

The nuclear sector, including both the defence and commercial sectors, in which Harry Peers commands a niche, well-established and trusted position with blue chip customers, is forecasted to grow through the UK Government’s decommissioning investment programme.

The UK Government is forecasted to require a decommissioning budget of £164bn over the next 120 years.

The total initial consideration will be £30.4m which includes company cash and cash equivalents of £12.4m.

The initial consideration will be financed by a combination of cash reserves and a term loan.

A performance-based deferred consideration is in place, which could increase the purchase price by up to £7 million if certain financial and operational targets are achieved for the period to 31 August 2020 that would be payable in late 2020.

Alan Dunsmore, chief executive of Severfield said: “This acquisition will help Severfield continue to deliver on its strategic objectives. Harry Peers’s experience in specialist, highly regulated, non-cyclical markets will enhance our future growth plans through expanding the Group’s capabilities and sector reach.

“We believe Severfield is best placed to help Harry Peers continue its profitable growth trajectory, through increased scale and investment and together with Harry Peers’s strong management team we have a real opportunity to develop a broader position within the UK structural steel services market.”