Howie chief nets £30m in sale of timber firm to rival

Published on Wednesday 18 November 2009 20:26

SCOTTISH timber firm Howie Forest Products has been sold in a deal that will provide an estimated £30 million pay day for founder Robin Howie and his family.

• Robin Howie will step down after 33 years at the helm of his firm. Picture: Complimentary

The company has been acquired by rival Scottish firm BSW Timber which will consolidate the firm's position as Britain's biggest sawmiller.

Robin Howie, joint managing director of the eponymous company and the sole shareholder, will step down 33 years after establishing the firm in Dalbeattie, Kirkcudbrightshire.

Hamish Macleod, the other joint managing director, will become managing director of Howie which will continue to trade under its own brand.

BSW, based in Earlston, Berwickshire, operates five mills in Britain and one in Latvia and supplies products to the construction, pallet, packaging, fencing, garden and DIY retail sectors.

Tony Hackney, BSW chief executive, said Howie would be an "impressive addition" to the BSW group of companies. "It has benefited from significant and recent investment in the latest leading edge technology in sawmilling," he said.

The aim would be to strengthen Howie's position in the development of the UK timber industry through the benefits of the merged operations.

He also revealed plans to take advantage of sterling's weakness to begin exports from Britain. The firm currently serves the eurozone through its Latvian plant.

The deal, officially for an undisclosed sum, is understood to be in the region of 30m though none of the parties involved would comment. BSW was financed Royal Bank of Scotland.

In the year to March, BSW made a loss of 4m on revenues of 102m, the second loss in its history and a reflection of tough trading conditions.

In the previous year, it reported a 9.2m profit on 125m turnover. This year, income will fall again to about 85m following the closure of a facility in south Wales where it axed 65 jobs. However, it expects to return to profit this year and has pencilled in 5m.

The merger with Howie will add 150 to a payroll of 600 and no jobs are at risk as a result of the tie-up, said Hackney.

The members of the executive team at Howie join the enlarged group in their current positions, apart from Robin Howie whose daughter Laura Smith, is sales director. She described the deal as a "superb opportunity" to build on the firm's strong UK market position.

"These are challenging times for our industry, and this deal will have nothing but positive impacts for our workers, our customers and our supply chain," she said.

According to the latest available figures, the industry employs 40,000 in Scotland, contributing more than 700m to the economy.

Andy Baker, a partner at Baker Tilly in Edinburgh, who advised RBS on the deal, said: "It is pleasing to see two Scottish companies come together to create a bigger and stronger organisation. There are signs that banks are becoming increasingly active in the M&A arena. As this continues, I expect we will see similar deals of this type across other sectors during 2010."

&#149 James Donaldson & Sons, the Fife-based timber specialist, has booked a pre-tax profit of 709,000 for the year to March, down from 3m a year earlier, as turnover fell by a fifth to 78m. Group borrowings were reduced "significantly" during the year.