Grafton spends €40m on purchases in State and UK

Grafton Group has spent €40 million on acquisitions in the Republic and in Scotland.

The company said yesterday that it had bought Portlaoise-based builders suppliers, the Telford Group, and the Plumbline Supplies chain of plumbers merchants in Scotland.

Grafton did not break down the price paid for the individual operations, revealing only that Telford had generated sales of €27 million last year, while Plumbline had reported revenues of €40 million.

Davy Stockbrokers analyst Mr Florence O'Donoghue said the combined price, which equates to just less than 0.6 times historic sales, looked "reasonable".

Mr O'Donoghue is expecting the acquisitions to boost Grafton's revenue base by at least €67 million on an annual basis, with Telford adding 11 per cent to Irish merchanting sales and Plumbline boosting UK revenues by 3.5 per cent.

Grafton executive chairman Mr Michael Chadwick said he was comfortable with the forecasts, describing both deals as "significant".

Telford, which includes three branches in Portlaoise, Athy and Mountrath, is Grafton's largest-Irish acquisition to date.

Mr Chadwick said the deal was important from a strategic perspective since it would bring the company into a geographical area it had previously surrounded.

The main beneficiaries will be the Telford family, with two brothers believed to have shared most of the undisclosed multi-million consideration.

Merrion Stockbrokers analyst Mr John Mattimoe pointed out that the Telford deal will boost Grafton's Irish market share and, as a result, make any takeover of rival company Heiton problematic in terms of competition law. With a holding of 23.9 per cent, Grafton is Heiton's largest shareholder.

The Plumbline business, which consists of 17 branches, will boost Grafton's overall plumbing merchanting chain in the UK to 135 outlets.

Grafton has acquired eight businesses in the year to date, with the most significant deal involving the €144 million purchase of Jackson Building Centres in the UK.

Both of the latest transactions were broadly welcomed in the market, with Grafton shares closing 23 cents stronger at €5.10.