Baggeridge Brick, the UK's fourth-biggest brick supplier, has agreed to sell out to the world's biggest operation in the sector, Wienerberger of Austria, for £89.2m.
Founded in 1944 at Sedgley in the West Midlands, Baggeridge is still a family-controlled company even though it has a full listing. The Ward family own nearly 30 per cent, led by the chairman Alexander Ward, who has a 7 per cent stake.
The UK's biggest brick supplier is Hanson, with 33 per cent of the market, followed by CRH, through its Ibstock business, with 30 per cent. Wienerberger has 15 per cent while Baggeridge has 9 per cent.
David Taylor, an analyst at Teather & Greenwood, said: "It has always been probable that Wienerberger would take Baggeridge if and when this family-controlled company cashed in its chips. It has ... There should not be competition issues. More or less, it is a done deal."
Wienerberger will pay 216p a share, a 26 per cent premium to Baggeridge's closing share price on Wednesday. Wienerberger, a fast-expanding materials group, paid a similar price to take over the UK-based Brick Business from Hanson in September 2004.
Baggeridge operates from five UK sites and can produce more than 300 million bricks a year. The Brick Business made 340 million.
Wienerberger said the acquisition would not only considerably strengthen its No 3 slot in the largest European market for facing bricks but would also significantly enlarge its product range across Britain.
Wolfgang Reithofer, the chief executive of Wienerberger, said: "By taking over Baggeridge, we become a national player, which is important for us."
Wienerberger's UK business is based in more southern parts of the country whereas Baggeridge has more sites further north.
Baggeridge said recently it was encouraged by signs of recovery in UK brick demand, as well as the Government's commitment to more housing, though soaring energy costs have burnt a big hole in its profits.
It made a pre-tax profit of £340,000 in the half year to 31 March, down from more than £2m the year before, despite a 5.5 per cent lift in sales to £25m.
Mr Reithofer insisted that it was "a good time to buy", adding that he would try to find new ways to cut energy bills. "The UK is the largest European market for facing bricks, and Wienerberger is confident of its long-term prospects," he said.
Wienerberger said it expected to make synergy savings worth about £5m a year from the Baggeridge deal, which it expects to be completed by the end of the year.
The offer needs approval from the the UK regulator and from 75 per cent of Baggeridge shareholders.Reuse content