Brickability £45m Acquisition of Topek Holdings Limited

BRICKABILITY GROUP plc, the construction materials distributor, has announced its £45m acquisition of Topek Holdings Limited, a specialist cladding installation and remediation contractor.

The acquisition gives Brickability the entire issued share capital of Group Topek Holdings Limited.

Topek offers a range of services which Brickability says will complement its existing cladding portfolio. The portfolio includes Taylor Maxwell Cladding, SBS Cladding, and Architectural Facades, giving Brickability a full range of cladding capabilities including design, fabrication, supply, and installation.

Acquisition of Topek

The acquisition of Topek will also significantly increase Brickability Group’s presence in the cladding remediation market. Since 2017, the requirement for cladding remediation in the UK has been of huge importance, the company says.

Established in 1981, Glasgow-based contractor Topek installs cladding and rainscreen systems to improve insulation, comply with fire safety standards, and add to the visual appearance of a building for its blue chip client base.

In the 12 months to 31 August 2023, Topek generated unaudited revenue of £21.2m and adjusted EBITDA of c.£8.0m.

Payment for the acquisition comprises an initial cash sum of £27.3m payable on completion, subject to final working capital adjustments to acquire the business on a cash-free, debt-free basis. This is followed by a deferred conditional payment of up to £17.7m.

The deferred payment is subject to performance against target criteria over the next three years. To provide Brickability with future flexibility, it has the ability, but not the obligation, to settle deferred payments by issuing new ordinary Brickability Group shares.

John Richards, Chairman, Brickability, said: “It is pleasing to report that the Board will be reporting H1 FY24 performance in line with Board expectations in spite of more challenging trading conditions.

“Whilst the second half of the year is anticipated to see industry wide volume reductions, from which the Group is not immune, the Board believes that Brickability’s diversified, multi-business, approach enables the Group to continue to perform well in the current market backdrop and that this strategy best positions the Group for the future.

“This acquisition is the Group’s second largest to date, and a very exciting one in our continued diversification strategy.

“The acquisition of Taylor Maxwell in 2021 delivered a significant increase in exposure to public and commercial end markets, and the addition of Topek further increases our presence in these markets.

“We believe this Acquisition will deliver significant value for our shareholders”.

Douglas Bryce, Managing Director, Topek, said: “We are excited to be joining the Brickability Group, adding our excellent product to their portfolio and allowing us the opportunity to provide our clients a broader offering of solutions. The team at Brickability has built a formidable operation and we look forward to working alongside them in exploring new opportunities.”

Further Acquisitions

The acquisition is expected to immediately add to earnings. It is being funded from the Brickability Group’s existing cash resources and from a newly amended and restated bank £100m borrowing facility, which will mature in October 2026. Brickability says it will initially provide the capacity to fund the Group’s working capital requirements and also potential further acquisitions.

Alan Simpson, CEO, Brickability, added: We’ve seen in our Bricks and Building Materials division how cladding products supply has gone from strength to strength. With Topek, which will sit in our Contracting division, we will be building on that and expanding our existing product and services range into supply and installation as we continue to pursue our diversified multi-business strategy.

The Topek acquisition marks another step in the continuing diversification of Brickability since its IPO on the stock exchange in 2019. Since then, Brickability has completed 12 acquisitions, pursuing a diversified multi-business strategy to broaden and deepen the Group’s product portfolio. The Group’s revenue growth since IPO has increased by c.£500m to the year ending 31 March 2023 while the proportion of brick revenue moved from c.80% to c.60%.

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