Aim-listed Michelmersh's shares rose 11 per cent this morning after the brick maker announced it has acquired its Yorkshire-based rival Carlton Main Brickworks in a £31.2m deal.
The addition of Carlton is expected to increase Michelmersh’s output to over 100m bricks per annum, an expected increase of over 40 per cent to Michelmersh’s current output.
Michelmersh expects the acquisition to give it "access to new regional markets, provide opportunities for cross selling and product synergies and increase output efficiency". Carlton currently manufactures up to 37m wirecut bricks per annum.
In the 12 months ended 31 March 2016, Carlton made an audited profit before tax of £2.62m on turnover of £13.1m, which represents an unaudited adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) of £5.56m after adding non-recurring expenses.
At the time of writing, Michelmersh's shares were up 11.11 per cent at 72p.
Frank Hanna, Joint CEO of Michelmersh Brick Holdings, said: "The acquisition of Carlton is an important strategic step forward in Michelmersh’s growth, adding a quality workforce, significant scale, output and earnings. The acquisition will also expand Michelmersh’s line of premium products, which is part of our core strategy, and consequently increase the Group's annual output to over 100m bricks.”
Hanna added that the fall in the value of the pound following the Brexit vote has helped boost business for UK manufacturers.
Hanna said: "Nearly all bricks used in the UK are made in the UK. While there are, and always has been, a proportion of imported products, the recent fall in sterling has made these products more expensive and recently brought an increased focused on UK manufactured products as one of the most cost-effective solutions.
"Michelmersh is very much a manufacturer that provides local products for local markets, for example, many of the bricks travel within a 60 mile radius of the plant."