Hanson buys into American house builder: Conglomerate confident of 'pretty good timing' for dollars 116m deal
Saturday 17 April 1993
Through Beazer, the homes and aggregates firm bought in 1991, Hanson is paying dollars 116m ( pounds 76m) for part of the Watt Housing Corporation.
Hanson is buying 37 developments representing 3,800 plots of land for residential use. Twenty are in California, and the rest in Phoenix, Arizona, and Las Vegas, Nevada.
Martin Taylor, vice-chairman of Hanson, said the plots would complement Beazer's house-building operation in south-eastern states. 'Both the US as a whole and the south-western states are lifting out of recession so this is pretty good timing.'
In 1992, Beazer built 1,200 houses in the US. Last year Watt Housing built 949, giving Beazer the chance to increase output by 60 per cent. Beazer has a larger house-building operation in the UK, where last year it built 5,000 homes.
Beazer's combined US and UK house-building operations were worth dollars 602m in turnover for 1992 and netted pre-tax profits of dollars 80m.
The dollars 116m purchase price represents a 20 per cent discount to the value credited in Watt's books. Mr Taylor said: 'The asset values in Watt's books reflect historic property prices. We are able to come to our conclusions without being saddled with those.'
Though large in absolute terms, the Watt acquisition is small fry for Hanson. Watt sold 949 homes last year for dollars 165m - or 1.2 per cent of Hanson's total turnover for the year to 30 September (at today's exchange rates).
The whole of Beazer's house-building operation contributed just 5 per cent to Hanson's overall profits for the year to September 1992 of pounds 1.1bn.
Matthew Sutherland, an analyst at the stockbroker NatWest Securities, said Hanson's strategy appeared to be to make bolt-on acquisitions in North America, while it was looking for a larger purchase in a new business area on this side of the Atlantic.
Mr Taylor said: 'We are interested in acquisitions whether they be here or in America.'
Mr Sutherland said the acquisition was an appropriate one for Hanson, but said the apparently low purchase price may be related to the sluggishness of the Californian economy, compared with the rest of the US.
California did well out of the 1980s boom but is taking proportionally more pain in recession. Californian property prices have been particularly vulnerable.
David Clarke, deputy chairman of Hanson Industries, the US arm of the conglomerate, said: 'The acquisition of Watt Housing at an appropriate time in the home-building cycle further expands Hanson's operations in building materials and handling equipment, forest products and home-building, in both the US and the UK, where it has become a major force in the construction industry.'
He estimated that the combined house-building operation would be the twelfth-largest in the US.
Hanson shares, unchanged yesterday at 232p, are at the same level as they were 12 months ago. In the intervening period the stock has sunk to 185p and risen to 262p. Relative to the stock market average Hanson has underperformed by 10 per cent over the past 12 months, but is still 20 per cent ahead over five years.
- 1 Indonesia executions: Death row British grandmother Lindsay Sandiford will refuse to wear a blindfold when she faces firing squad
- 2 The man who filmed the Freddie Gray video has been arrested at gunpoint
- 3 How the language you speak changes your view of the world
- 4 The top 50 cities for young people to live in
- 5 Uploading pictures to find out how old you are gives Microsoft the right to post them wherever they want
General Election 2015: Fishing is on Nigel Farage's mind as he casts a line to the disaffected of Grimsby
Oxygen-starved 'dead zones' with no marine life up to 100-miles long discovered in the Atlantic Ocean
The man who filmed the Freddie Gray video has been arrested at gunpoint
Indonesia executions: Death row British grandmother Lindsay Sandiford will refuse to wear a blindfold when she faces firing squad
Russian warships accused of 'chasing away' Swedish vessel to prevent Baltic States from achieving energy independence
Over 50,000 families shipped out of London boroughs in the past three years due to welfare cuts and soaring rents
EU asylum policy is 'a direct threat to our civilisation', says Nigel Farage
The Rothschild Libel: Why has it taken 200 years for an anti-Semitic slur that emerged from the Battle of Waterloo to be dismissed?
General Election 2015: SNP and its activists 'openly racist' towards the English, Farage says
General Election 2015: UK will be 'run for the wealthy and powerful' if Tories retain power, Labour warns
Schools forced to act as 'miniature welfare states' with teachers buying underwear and even haircuts for poor pupils
iJobs Money & Business
£16000 - £18500 per annum: Recruitment Genius: This is an excellent opportunit...
£24000 - £28000 per annum: Recruitment Genius: A Senior SEO Executive is requi...
£16000 - £18000 per annum: Recruitment Genius: An Online customer Service Admi...
£18000 - £22000 per annum: Recruitment Genius: This global, industry leading, ...