Takeover time again?
Cash rich to rescue the needy
Published: 21 July, 2009
UK: One in 10 companies in the UK builders’ merchants industry could change ownership as a result of the current economic climate, according to a recent report issued by financial analysts, Plimsoll.
With a surprising number of cash rich competitors waiting in the wings, the market could be set for a prolonged period of consolidation.
David Pattison, author of the Plimsoll Industry Analysis – Builders’ Merchants, said: "In the current climate, there are simply too many companies chasing too little market. With many directors eyeing the exit doors and highly leveraged buyouts consigned to history for the time being, it really is a buyers’ market out there for cash rich companies."
The report identifies 114 companies that have a sizeable cash reserve on their balance sheets that, due to record low interest rates, is generating nothing. “One company has a £90m; a whopping 80% of turnover. These companies are now in the position to buy up large chunks of market share at rock bottom prices and make that money work for them,” Mr Pattison stated.
"The UK builders’ merchant market is still widely regarded as one of the UK's most fragmented sectors. In our report, we analysed 875 companies with a turnover of over £1m/year and have picked out 100 that are primed to be taken over.
“Buying one of these businesses represents a massive opportunity for someone to enhance their share of the market.” He predicted that the market is set for a wave of takeovers in the coming months.
“Plimsoll Industry Analysis – Builders’ Merchants will tell you which companies are set to be buying and who will be selling,” Mr Pattison said.
Readers of Builders' Merchants News are entitled to a £50 discount on this report. Call 01642 626400 for further details and quote reference PR/CS10.