Sheffield-based builder and developer Henry Boot said it will take full ownership of its subsidiary Stonebridge Homes Group Ltd in a deal worth at least £30 million.
Boot will acquire the 50% share it does not own from its joint venture partner, Stonebridge Projects Ltd, which is defined as a related party and subsidiary.
The deal is structured to complete in three tranches over the next five years with the total purchase price linked to the performance of Stonebridge over the period.
The company said the move would help Boot focus on “high quality land, prime property development and premium homes.”
Tim Roberts, Chief Executive Officer, Henry Boot, said: “This transaction represents an important strategic milestone for Henry Boot, allowing us to acquire full ownership of a high growth builder of premium residential homes that we already know well through our existing 50% share in the business.”
“The acquisition of Stonebridge also further cements our position in the U.K. house-building sector, a market which currently benefits from a number of supportive structural and political tailwinds, while at the same time simplifies Henry Boot’s structure. The consideration is performance linked, and the phased structure is designed to generate strong returns whilst maintaining gearing within our optimum range of 10-20%. All of this gives us confidence that this transaction will help drive enhanced shareholder value over the medium term and will be a significant part of our plans for growth.”
Stonebridge is a UK multi-regional housebuilder which is currently focused on premium homes in Yorkshire and the North-East. In the five years ending 31 December 2023, revenue and operating profit more than doubled, reaching £94.4 million and £5.9 million respectively. In 2023 Stonebridge completed 251 homes and has a medium-term target of delivering up to 600 new homes annually.
The deal will be completed in three tranches over the next five years, with anticipated fixed payments totalling £30 million and additional payments linked to Stonebridge’s performance.
The first tranche is expected to be completed in January 2025, with Boot acquiring 12.5% of Stonebridge for a fixed price of £10 million. A second tranche to acquire a further 12.5% is expected to complete in January 2026, and a third and final tranche to acquire the remaining 25% is expected to complete in January 2030.
The purchase price is linked to a multiple of 1.6x tangible gross asset value of Stonebridge at the time each tranche is completed. Boot said its board was advised by Peel Hunt, which considers the terms of the deal to be fair and reasonable for shareholders.