Breedon Group

Upgrading estimates for Lagan acquisition

  • Sectors : Building Materials
  • Companies : Breedon Group

Ratings and price correct at time of issue.

  • Breedon Group

    Closing Price: 8220p

  • RATING 25/10/17

  • PREVIOUS RATING 06/03/17

    OUTPERFORM

DAVY VIEW

We have upgraded our Breedon Group estimates to reflect the acquisition of the Lagan Group. The deal marks another astute step for the management team following the purchase of Hope in 2015. With Lagan, the group has deepened its vertically integrated model in the UK, while stepping into Ireland for the first time. Strategically, the deal ticks all the boxes, bringing enhanced scale and synergies as well as greater product and regional diversification. Importantly, the deal does not shut the door on further acquisitions as debt levels should fall quickly. While acknowledging the quality of the transaction, we maintain our ‘Neutral’ rating, reflecting our concerns for construction end-markets in the UK.

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Jul 3 2018, 06:45 IST/BST

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