Springfield Properties is set to acquire the Scottish housebuilding business of Mactaggart & Mickel Group for £46.3m.
This comprises £10.5m cash paid on completion and a deferred cash consideration of £35.8m to be paid as homes are sold over the next five years. The deal will be funded from Springfield’s internal resources and existing debt facilities with Bank of Scotland.
The group has acquired six live private and affordable sites with a fair value of approximately £15m, plus fixed assets. It has also bought a brand licence to build homes as Mactaggart & Mickel on a further 11 private and affordable sites.
The total 17 sites, of which 16 have planning permission and equating to the delivery of circa 700 homes, have a gross development value of around £230m.
Moray-based Springfield intends to retain all of Mactaggart & Mickel’s housebuilding business employees, while the business will continue to operate from Glasgow, with its three directors – Peter Shepherd, Joanne Casey and Marion Forbes – reporting into Martin Egan, Springfield’s chief operating officer.
Mactaggart & Mickel’s investments, strategic land, commercial property, lettings and contracts divisions will remain under Mactaggart & Mickel Group control.
The acquisition also includes Timber Systems, a timber frame factory near Glasgow.
The group already constructs 90% of its homes from timber kits and the addition of a second timber frame factory will secure kit supply and increase capacity for future growth, while further reducing its carbon footprint. Springfield also committed to retaining all of Timber Systems’ employees.
In addition, Springfield and Mactaggart & Mickel have established an agreement that gives Springfield opportunities for future acquisitions of sites from Mactaggart & Mickel’s remaining land bank of approximately 2,300 acres across Scotland – including “highly desirable locations” within the Central Belt.
The payment of the deferred cash consideration is subject to an annual minimum payment of £7.7m from the second year following completion.
The transaction is expected to be earnings enhancing in the current year to 31 May 2023. Springfield expects to report results in line with market expectations, with good revenue growth and a better-than-expected reduction in net debt to circa £39m at year end – down from £43m at 30 November 2021.
Innes Smith, chief executive of Springfield Properties, commented: “As well as bringing another premium brand into the group, this acquisition gives us land, with planning permission, in areas of significant demand.
“The structure of the acquisition – with the majority of the payment to be made as homes are completed – de-risks the deal and creates an effective and efficient means of acquiring land.
“The addition of a timber frame facility in the Central Belt, alongside our existing facility in Elgin, secures our supply of timber kits and provides further capacity to support our next stage of growth.”
Paul McAninch, group finance director at Mactaggart & Mickel, added: “Our company has had a proud tradition as a leading housebuilder in Scotland, which is built on the work of its dedicated teams.
“This tradition will continue, and I’m pleased that there will be continuity of employment as a result of this agreement.”
The announcement also marks a change for Mactaggart & Mickel’s leadership.
Ed Monaghan is to retire in October as group chief executive, after working for the company for more than 40 years, including more than 15 as leader.
McAninch, who has been finance director for more than seven years, will lead the group as its new chief executive.
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