On the mergers and acquisitions front, 2016 wasn’t a bad year on the face of it. Although quiet at first, the bulk of the activity came in the second half of the year, after the EU Referendum.
As we look towards 2017, I believe that the energy in the M&A market in our industry at the end of last year was only a taster for what is to come. There is still lots of consolidation to happen in our market. There is oversupply in certain parts of it, which makes some companies in these parts rough diamonds that make good acquisition targets. We have all heard the various rumours about what may be to come this year.
But for now, this is a recap of all the major industry acquisitions that happened in 2016.
Click a heading to read each post in full!
Over in the machinery sector of the fenestration industry, the M&A season kicked off early with the major takeover of one of the best known machinery companies, Elumatec, by Italian firm Cifin Holding. Cifin also owns Emmegi Group, so combined this created a real heavyweight business group in the fenestration machinery market.
No details of the deal were announced, but given the stature of the businesses involved, we can confidently assume some hefty numbers.
In early March Eurocell expanded it’s reach into the residential door market with the acquisition of Vista Panels. In the press release, it was stated that Vista had a turnover of £14m, making it a decent sized fabricator of composite doors and PVCu doors within the wider sector.
For Eurocell, who already had exposure in the doors market via their Aspect bi-folds, French and sliding doors, the acquisition of Vista gave them the complete set of doors products. Vista was already the sole supplier of door sets to Eurocell, alongside being a major buyer of Eurocell profile. This was vertical integration of these two businesses, and seemed a natural fit. No mention was given to the value of the acquisition.
After a hiatus of four months, presumably because of the EU Referendum and possibly the FIT Show too, in early July, it was announced that the executive team at the top of Polyframe had completed the takeover of the group of businesses.
It was triggered by the retirement of the founder and Chairman, Martyn Buckley. The acquisition was backed by funding from Cairngorm Capital. No details about the value of the deal were announced by Polyframe. This was only the start of what was to become a pretty busy few months for the business, as they set out their aims to focus on their installations side of the business.
Hot off the heels of the Polyframe announcement, a few days later what was described as a management buy-in was completed at Barnsley based Sash UK. This is a company turning over £22m a year, and long established. Although no mention was made of the value of the deal, or how the funding came about, we can assume some significant money will have traded hands.
At the time, there were whispers of a number of deals on hold until the result and fallout of the EU Referendum were known. This may have been one of them. I wrote at the time how I thought that despite the political uncertainty along with a new economic unknown, this deal, and the others that came after it, was a sign that UK fenestration was still in a good place. Good enough for the M&A market to continue with good speed.
The day after the Sash UK announcement came the hat-trick. Clayton Glass announced that they had acquired fellow North East glass specialists Romag Ltd. Again, like most of the deals so far in the year, the amount they were purchased for was not disclosed.
Romag are kind of like the Tony Stark (Iron Man) of the glass sector. For things like government contracts, security, experimental, prototypes and anything other specialist and futuristic, Romag are the company. Clayton Glass were already considered one of the more forward thinking glass businesses, but with Romag on board, there is suddenly a glass group that can bring experimental, high-end, technologically advanced glass tech to the wider industry.
Not a domestic acquisition this one. Again in July, Mexico based Vitro agreed to purchase the flat glass operations of US based PPG for a whopping $750m. Although this may have meant very little to UK based fenestration businesses, I included it on DGB firstly because of the sheer size of the deal in comaparison to UK deals, and secondly due to the Mexico/US story as the rise of Donald Trump and his views on Mexico began to make headlines.
This was the first foreign investment deal since the UK voted to leave the EU. On the first day in August Sweden based Inwido announced they had bought British fabricators CWG Choices for an impressive £11.6m. Also the first deal where the purchasing figure had been announced, which was refreshing to see.
This wasn’t the first UK purchase from Inwido. It followed an October 2015 purchase of Jack Brundson & Son Limited. At the time, I wrote again that despite Brexit and the uncertainties that it brings, the UK fenestration market remained a strong and attractive sector for overseas companies to look for acquisition targets. In fact foreign businesses will have been helped by the fall in the value of Sterling against the Euro and Dollar.
We had a bit of a lull, until Polyframe sprung back into life with the announcement that they had acquired the long established WB Group. Again, no figures were disclosed.
This was the first acquisition by Polyframe since their management buy-in which happened in July. Their purchase, according to the official statement, was prompted by the retirement of Kevin Craggs, WB Group’s founder and Chairman. This was quite a significant deal. WB Group operate out of a state of the art 70,000 square feet facility in County Durham, employing 100 people. It appears WB’s Virtuoso door range was of particular interest.
This wasn’t to be the final acquisition of a manufacturer by Polyframe by the end of the year.
The first big hardware deal of the year was announced in mid-October as it was announced hardware mega-business ASSA ABLOY has purchased Trojan Hardware. As usual, no details of the purchase was mentioned in any official press releases.
This was the second deal done by a foreign based businesses acquiring a UK based company. By now it was becoming very obvious that UK fenestration businesses were becoming very nice targets thanks to the devaluation in the Pound. Still, generally not a bad thing, and it showed that there was still a level of solid confidence seen in the UK glazing sector.
Now this was an interesting deal. As far as I knew, at the time, there was no recent acquisition of a lantern roof specialist business, until this one at least anyway. At £30m, this was an impressive purchase by equity fund managers New Wave Partners LLP, and for Roof Maker. Certainly hard work paying off for the owners.
But away from the sums of money paid, this raised the value of all other lantern and skylight roof makers across the sector. I guess before this deal putting values to businesses was a bit of a guess. However, seeing Roof Maker go for hefty £30m, you could almost see the asking prices for other similar businesses go up over night. This was a deal that not only changed Roof Maker, but the sector in which they operate too. Something we rarely see.
After Polyframe’s management buy-in in July, they stated that their focus was on their installers. It was said that their trade counter business was perhaps to leave Polyframe in some way in the future. Well, that is what happened.
In a two way deal, Polyframe sold their trade centre businesses to Stevenswood of Scotland, giving that business a presence across England, to add to their Scottish network of centres. In a return deal, Polyframe acquired the manufacturing site Stevenswood owned, giving them a 55,000 square foot facility in the north of the UK. Quite a charming deal for both businesses there I think.
This would be the last Polyframe deal to be done in 2017.
The rapidly energetic acquisition season continued towards the very end of the year as growing group Prefix announced that they had acquired Sussex based Pavilion Systems…for an undisclosed sum!
This was a big deal for Prefix. Not only was this their fifth fabrication site, but also gave them a genuine presence in the south of the UK. They now stand in good stead to start stealing market share from their competitors in that part of the country. Not only that though, a fifth site boosts capacity and capabilities of their fabrication. Prefix is far, far more than just a roof fabricator. Watch this company closely. Prefix will be far bigger and far more diverse in maybe just two to three years time.
Again in December, Synseal announced that they had purchased the IGU manufacturing assets of Euroview Manufacturing Limited. This purchase was expected to boost Synseal group revenues above the £150m mark according to the company.
Over the past couple of years Synseal has been diligently expanding the group and it’s reach into other parts of the market. It is steadily becoming one of the bigger business groups in the UK fenestration market, along with new product launches it is one of my companies to watch during 2017. No mentions were made of the value of the acquisition.
We rounded off the year with a pretty large scale acquisition in the hardware market as UAP announced that it had acquired the long established Fullex.
This was a big deal for UAP. Fullex are a well respected brand, credited with a number of industry firsts and innovations. In the world of hardware, UAP are also an expanding group. So to be able to add Fullex to the expanding portfolio of businesses was great news for UAP.
I make that 13 major UK fenestration industry acquisitions and 1 great big whopping Mexican/US one. Not a bad return, in light of mid-year events. Still, I believe that by the end of 2017 we could see even more than this. There are a number of companies looking to grow their market share and extend their reach, so will need to flash the cash in order to do so. There is also plenty more consolidation to do before the UK market is at the right size in relation to home owner demand.
It could be a busy M&A year!
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