DAVY VIEW

Breedon has announced a small strategic bolt-on to its existing mini mix business. The acquisition will in-fill the group’s footprint in the North of England and Scotland and, as a small existing customer, provide an opportunity to internalise cement and aggregates supply. The deal is small (just over £2m) but highlights the group’s potential to exploit its acquisition pipeline. The stock has done well in recent weeks, reaching new multi-year highs. We believe this reflects strong underlying trading conditions with reports of shortages and sharp price hikes for some building materials. Longer term, we see the stock adding further strategic acquisitions and benefitting from increased government funding for infrastructure.