Group to acquire European steel construction business for £21m

Structural steel group, Severfield, has agreed to acquire 100% of the share capital of Voortman Steel Construction Holding BV (VSCH).

Thirsk-based Severfield says it will buy this European steel construction group for a net consideration of €24m/£21.2m payable in cash on completion.

The total cash consideration will be €29.5m/£26m including cash and cash equivalents of €5.5m/£4.9m, which is being funded by a combination of group cash reserves (c.€8.5m/£7.5m) and a new term loan (c.€21m/£18.5m), repayable over a five-year period.

Severfield says VSCH is a profitable, cash generative business headquartered in Rijssen, the Netherlands. It explains the deal will provide it with a manufacturing base in Europe to complement its existing European business.

For the 12 months to 31 December 2021, VSCH recorded unaudited consolidated revenues of €73.5m/£65m, EBITDA of €3.1m/£2.7m and a statutory profit before tax of €1m/£884,000.

Alan Dunsmore, Severfield’s chief executive office, said: “We’ve been growing and developing our European presence over recent years and the acquisition of VSCH will help the group continue to deliver on its growth strategy.

“VSCH is highly regarded in the Netherlands delivering a quality service to its large European customer base and has been growing its capabilities in the high growth electricity distribution sector and through new design and build (turnkey) solutions.

“We believe the combination of Severfield and VSCH will result in a broadening of our service offering and an ability to grow in different sectors and geographies.

“Not only is the acquisition of VSCH anticipated to be earnings enhancing in its first full year of ownership, the transaction will further cement our position in a growing European market and provide opportunities for further profitable growth.”

VSCH has modern production facilities, generating output of around 15,000 tonnes per annum, and is co-located with Voortman Steel Machinery Holding BV (VSMH), a manufacturer of steel fabrication machinery.

Severfield explains the acquisition will allow for areas of future collaboration with VSMH, including the development of robot production technology, proprietary fabrication software and bespoke equipment.

It adds the deal will give it immediate access to new and attractive market sectors, providing the group with further market and geographical diversification outside its core UK operations.

Severfield will gain access to the fast growing Dutch electricity distribution market. This market has high barriers to entry and the current low carbon energy transition trend is driving demand for upgrading and expanding the electricity network in the Netherlands – and in other EU countries – over the next 10 years.