Jackson family clean up in £88m sale of builders' merchants chain

The family behind an East Midland builder's merchant business yesterday earned the lion's share of £66m in a cash takeover of the company by the Irish builder Grafton.

Grafton has offered €135.4m (£88m) in cash for the family-owned Jackson Building Centres. The proceeds of the sale will be divided between Jackson's shareholders.

The venture capital firm, 3i, owns 25 per cent of Jackson with the remainder divided between the Jackson family. The family of a former partner in the business also has claim to a stake.

The firm began as a small hardware store in Lincoln town centre in 1946, set up and run by Eric Jackson. Since then it has grown to become the seventh-largest builders' merchants in the UK, with 18 outlets across the East Midlands. The business employs more than 800 people and has a turnover of £130m, but has stayed family-owned. Its chairman, Barry Jackson, Eric's son, relinquished executive control of the business last year to his daughter Sue Knight, and his nephew Simon Jackson, who now run the business.

The Jackson family, however, and its other shareholders have been keen to find a buyer for the group that would help it expand.

"We expanded a lot in the 1980s, in to ironmongery, plumbing and tool hire," Simon Jackson said. "There has also been a lot of house building in the East Midlands area, which has helped fuel our growth and our sales were up 10 per cent last year. Being part of a larger group will help our business grow further."

To fund the acquisition, Grafton yesterday announced plans for a €70.5m rights issue, offering one new share for every five in issue at a price of €2. This represents a 37.5 per cent discount to its closing price on Monday of €3.20. With the acquisition of Jackson, Grafton becomes the fourth-largest builders' merchant in the UK, with 245 outlets and an 8 per cent market share.

Grafton plans to allow Jackson to continue as an independent business within the Grafton group and will keep the Jackson name in its East Midland stores.

Simon Jackson and Ms Knight, the grandchildren of its founder, will remain in charge of the business after its takeover.

A spokeswoman for Grafton said it was keen to tap in to Jackson's key sites in the East Midlands. "Many builder's merchant firms are family-owned businesses. Brand loyalty is very important and customers have a special relationship of trust with the owners – they like to know whom they are dealing with," she said.

A trading statement from Grafton yesterday said its 2002 pre-tax profits would be no less than €80m and further profitable growth was expected in 2003. Despite a slowing of the economy and the construction industry in Ireland, the group has expanded its operations in the UK, which now account for 70 per cent of its turnover. It is planning further acquisitions this year.