UK construction aggregates provider SigmaRoc has conditionally agreed to acquire Belgian sea defence rock quarrying group Stone for €2.2m. The acquisition will be SigmaRoc's first outside the UK and CEO Max Vermoken says it will give the group an operating hub in the Benelux region from which it can expand in Northern Europe. Stone operates two quarries, a wharf and a contracting business in Belgium, focusing on armour rock for river and sea defence work. For its financial years 2016, 2017 and 20181,
UK construction aggregates provider SigmaRoc has conditionally agreed to acquire Belgian sea defence rock quarrying group Stone for €2.2m.
The acquisition will be SigmaRoc’s first outside the UK and CEO Max Vermoken says it will give the group an operating hub in the Benelux region from which it can expand in Northern Europe.
Stone operates two quarries, a wharf and a contracting business in Belgium, focusing on armour rock for river and sea defence work. For its financial years 2016, 2017 and 20181, Stone averaged revenue of €3.8m and recorded an adjusted EBITDA (earnings before interest, taxes, depreciation and amortisation) of €500k, leading to an effective average acquisition multiple of 4.4 times average EBITDA. For the year ended 31 December 2018, Stone reported profit before tax of approximately €355k. As at 31 December 2018, Stone reported gross assets of €3.7m.
SigmaRoc adds that, while the aggregate consideration will remain fixed, the exact proportion of cash and new ordinary shares to be issued as consideration is expected to be determined during Q4 2019. This will follow the finalisation of SigmaRoc’s due diligence work, the satisfaction of conditions precedent customary for a transaction of this nature and the execution of a share purchase agreement.
The €2.2m purchase price comprises up to €1.3m staged consideration and €0.9m of assumed debt. The consideration will be settled through a combination of cash and the issue of new Ordinary Shares at a price of 50p per share. The vendors of Stone are Mr Christophe de Limburg Stirum and Mr Jacques Emsens, holding 40 per cent. and 60 per cent. respectively.
In conjunction with the conditional acquisition of Stone, Jacques Emsens has agreed to join the board of SigmaRoc as a non-executive director.
Emsens has previously helped build SCR-Sibelco into a leading materials solutions and specialty sands company. Founded by the Emsens family, Sibelco achieved revenue of €3.5bn in 2018, with operations in 30 countries and employing over 10,000 people. Jacques Emsens serves on the board of Sibelco and on the board of Sofina (Société Financière de Transports et d’Entreprises Industrielles), one of Belgium’s largest investment companies. SigmaRoc says that his extensive history in defining and implementing strategies of industrial businesses, as well as his access to potential investors, should result in a significant contribution to the board.
He is expected to join the board in the coming months, following the completion of the acquisition of Stone and customary director due diligence.
In addition to the Stone acquisition, the SigmaRoc board says that the company has “further exciting opportunities”, including certain transactions which it believes can be completed during 2019. The company adds that it expects to have access to additional acquisition targets and will be well placed to continue its buy-and-build strategy in Northern Europe.
SigmaRoc chairman David Barrett commented: “We are very pleased to announce Jacques’ proposed appointment to the board. There are few names in our industry which carry as much weight as Jacques Emsens. It also marks our first step into mainland Europe, where we are working hard to unlock several opportunities starting with Stone. Subject to obtaining shareholder approvals, we look forward to updating the market regarding our exciting acquisition pipeline over the coming months.”
The company has posted a notification to shareholders that it will hold a General Meeting on September 27 to request additional authorities to issue new ordinary shares of 1p each in the its share capital, which SigmaRoc says will enable it to execute “certain pipeline transactions” in Q4 2019.
