Multi-million pound sales of building materials firm divisions

Sheffield-headquartered building materials specialist SIG is proposing to sell off two of its divisions, in deals totalling more than £235m.

The listed company has proposed selling its Air Handling Division to France Air Management SA for 222.7m euros (£198.3m) and its Building Solutions Division to Ireland-based Kingspan Group for £37.5m.

Commenting on the sale to France Air, SIG said at least £130m of the net cash proceeds will be used to reduce the company’s financial indebtedness.

Most of any residual net cash proceeds will be used to make a return to shareholders.

The disposal is conditional upon approval by SIG shareholders and anti-trust approvals. Completion is expected to occur in the first quarter of 2020.

Meinie Oldersma, Chief Executive Officer of SIG, said: “We believe the proposed sale of our Air Handling Division represents an attractive value for SIG’s shareholders.

“The disposal is a result of continuing management actions in line with stated priorities to reduce financial leverage, to simplify the Group’s operations by exiting from non-core businesses and to deliver significantly improved operational and financial performance.

“It enables SIG to become a more focused business, with leading positions and attractive medium-term growth prospects in its core markets, a strengthened balance sheet and the flexibility to pursue further value creating investment opportunities.”

The £37.5m Building Solutions sale to Kingspan Group will also be used to reduce the company’s financial indebtedness, with the deal conditional on meeting conditions such as completing the Competition & Markets Authority’s clearance process.

Building Solutions is a manufacturer and distributor of building envelope solutions operating through brands which include Steadmans, United Roofing Products, Trimform Products, and Advanced Cladding & Insulation.

In the year ended 31 December 2018, the business reported revenue of £60m, operating profit of £3.3m and operating cash flow of £5m, with gross assets of £28.8m.

Oldersma said: “This disposal, on attractive terms, is in line with SIG’s medium-term strategy and completes the exit of peripheral, non-core businesses identified in our 2017 strategic review.”

SIG has also today issued a profit warning in its trading update covering the period since the announcement of the 2019 half year results on 6 September 2019, together with an outlook for the full year 2019.

A company spokesman said: “The Group has been reporting during the year a deterioration in the level of construction activity in key markets and highlighting a number of key indicators pointing to further weakening of the macro-economic backdrop, notably in the UK and Germany.

“This deterioration has accelerated over recent weeks, and political and macro-economic uncertainty has continued to increase.

“Management is taking ongoing actions to address the continuing market weakness. Further benefits from transformational initiatives and the Group’s normal seasonality are still expected to deliver a stronger second half.

“However, the recent further weakening of the trading backdrop as the Group has entered its traditionally strongest trading months of the year means the Board is now anticipating, in both specialist distribution and roofing merchanting businesses, significantly lower underlying profitability for the full year than its previous expectations.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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