Springfield Properties, the fast-growing Scottish housebuilder, has sealed a further key acquisition, as it pushes into Edinburgh’s commuter belt.
The Elgin and Larbert-based group, which floated on the stock market in October 2017, is buying Livingston-based peer Walker Group in a multi-million-pound deal.
The takeover is being funded from Springfield’s existing cash balances and borrowing facilities with Bank of Scotland. It will expand the group’s land bank and sales presence to the “high-growth” commuter belt surrounding Edinburgh, Springfield noted.
The deal will be earnings enhancing by “low double-digit” in the current financial year, the firm added.
Under the terms of the agreement, Springfield has paid an initial sum of £21m in cash, with a further £10m spread across several payments, subject to conditions, including the granting of planning consent for a site in Tranent, East Lothian.
Springfield will also acquire £41.4m of cash in Walker, as part of a gross consideration of £72.4m.
Sandy Adam, executive chairman of Springfield, said: “Walker Group has a reputation for building excellent homes in great locations. The ethos among employees and the quality and location of the land bank are a great fit for Springfield.
“The acquisition has enabled us to diversify our land bank with sites at various stages of planning and development in east central Scotland, where we have been looking to strengthen our foothold.
“We are pleased to have efficiently delivered a large proportion of our land-buying plans for the wider Edinburgh area, adding ten sites to our land bank in one deal rather than with multiple individual deals.
“The acquisition of Walker supports Springfield’s growth aspirations with land and skilled employees. It enables us to deliver housing more widely across Scotland at a time when supply continues to fall well short of demand and average house price growth in Scotland is ahead of the rest of the UK.”
The firm said it would retain Walker’s premises in Livingston, all of the company’s 50 staff and the established Walker brand. Peter Matthews, Springfield’s managing director for central Scotland (private housing), will take over the responsibility of running the Walker business.
In September, Springfield reported a 46 per cent rise in profit before tax to £9.8m, excluding exceptional items.
Revenue grew by 27 per cent to £140m in the year to 31 May, with its affordable housing arm enjoying a 60 per cent sales increase. The company enjoyed a record total of 770 house completions across all divisions.
It reported exceptional costs of £300,000 in IPO-related expenses and £300,000 related to the acquisition of Glasgow-based Dawn Homes, which allowed it to expand into the west of Scotland.