Builders merchant acquired for £23.1m to expand into the north
Independent builders merchant A.W. Lumb has been acquired for £23.1m.
Lords, a distributor of building materials has made the move in an effort to extend its geographical reach and product range, particularly in the north.
The cash purchase consists of £19.5m due on completion and £3.6m payable in equal annual instalments over the next five years. It is to be funded from Lords’ existing cash resources and debt facilities.
Offering building materials, garden landscaping, timber, joinery and roofing products from its depots in Tamworth and Dewsbury, A.W. Lumb’s key senior management and its 77 employees will be also joining the group.
The firm was family-owned when established in 1964, but a management buyout occurred in 2017.
Alongside the acquisition, the group has agreed with its lender, HSBC, to increase the level of its revolving credit facility from £30.0 million to £50.0 million. HSBC has also agreed to increase the group’s invoice discounting facility from £10.0 million to £20.0 million.
This increased debt capacity will provide the group with additional resources with which to continue to take advantage of further accretive acquisition opportunities.
In the year to 30 June 2021, AWLC generated revenues of £43.3 million, EBITDA of £3.9 million and a profit before tax of £3.8 million.
As of 30 June 2021 AWCL had pro forma net assets of £10.1 million, £1.9 million of pro forma net cash and freehold property with a market value of £4.6 million.
Shanker Patel, Chief Executive Officer of Lords, said: “This acquisition delivers against our strategy of gaining market share through geographic expansion and product range extension. Specifically, it gives Lords broader reach in the North of the country.
“A.W. Lumb is highly regarded in its local markets, respected for its product expertise and superior service levels and we are delighted to welcome their 77 colleagues and senior management to our team, who we believe share the same values as Lords.
“Furthermore, this acquisition is a major milestone in our growth and supports our stated ambition to reach £500 million revenue by 2024.”