Grafton, the builders' merchant and DIY group, has agreed to acquire Latham Timber Centres (Holdings) from James Latham, for £7.94 million sterling (€12.2 million). As Grafton will be taking on cash of £1.4 million, the consideration will, in effect, amount to £6.54 million.
The acquisition is subject to approval from James Latham shareholders at an extraordinary general meeting. Over 50 per cent of Latham's equity is owned by the Latham family.
The business being purchased has four branches which are located in Milton Keynes in Buckinghamshire, Braintree in Essex, Horsham in Sussex and Luton in Bedfordshire. It is involved in the supply of timber and building materials. Grafton's executive chairman, said the branches are a "good geographic fit with the existing Build-base branch network and provide opportunities to develop Latham's traditional strengths and expertise in the distribution of timber products, and to broaden the range of building materials sold". The businesses generated sales of £13.7 million in the year to March 31st, 1999 and an adjusted operating profit of £439,000. Pre-tax profit amounted to £196,000.
Mr Chadwick said the integration of the outlets into the group "will lead to a significant improvement in profitability due to operational efficiencies and buying benefits".
The acquisition is payable in cash and will be financed from existing resources. The consideration is based on net assets at completion not being less than £4.48 million. Goodwill will amount to £3.46 million.
Mr Peter Latham, chairman and managing director of Latham Timber Centres, said the proposed acquisition "represents an excellent opportunity for the business to be developed as part of a larger merchanting group that is actively participating in the ongoing consolidation in the UK merchanting industry".
