Group swoops for high voltage infrastructure contractor in £26m deal

Renew, a Leeds-based engineering services group, has acquired Salford-based Excalon Holdings for a total consideration of up to £26m.

It allows Renew to expand into the electricity transmission and distribution market.

Excalon is an infrastructure contractor specialising in the provision of high voltage and extra high voltage infrastructure to the UK electricity sector.

It has a number of long-term frameworks with electricity Distribution Network Operators (DNOs) across the UK.

The UK electricity DNO market is regulated by Ofgem and operates in five-year control period funding cycles.

The RIIO ED2 cycle began in April 2023 with the latest determination of funding set at £22.2bn.

Advancing into this market allows Renew to access both the opportunities in ED2 as well as the upgrade of the grid that is required to support the UK’s zero carbon generation and renewables sector.

The initial consideration of £22m has been funded from the group’s existing cash and banking facilities.

Additional consideration of up to £2m will become payable in 2025 along with a further £2m in 2026, conditional upon the vendors remaining with the businesses and specific profit targets being achieved.

The valuation of the business was based on Excalon generating a sustainable EBITDA of at least £3m per annum and the profitability of Excalon is expected to be in line with Renew’s current Engineering Services operating profit margin.

Paul Scott, chief executive officer of Renew, said: “This acquisition broadens Renew’s exposure to another critical UK infrastructure market, presenting tremendous long-term growth opportunities.

“It is consistent with our stated strategic objective to expand into new complementary sectors that have high barriers to entry coupled with resilient attributes.

“This is a highly regarded business with a strong track record in this specialist sector, and I am pleased to welcome the management and staff of Excalon to the Renew family.”

The shareholders of Excalon were advised by a team of M&A lead advisers from Grant Thornton (Usman Malik, John Whitney, Maria Barnes) alongside legal advisers from Ward Hadaway (Adrian Ballam, Rachael Sykes), JMW (property) and Haines Watts.

Renew was advised by Walker Morris (legal) and PwC (financial due diligence).

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