The Miller Group has announced that it has acquired Fairclough Homes from Centex Corporation, who are listed on the New York Stock Exchange, in a deal which values the business at £264 million. Miller's cash consideration of £264m includes existing borrowings.
Miller Homes produced 2,505 completions in the year to 31 December 2004 generating turnover of £394m, and Fairclough Homes produced 1,563 completions in the year to 31 March 2005, generating turnover of £270 million. Both businesses have expansion plans for the forthcoming year which now provide the opportunity for Miller to derive benefits from greater critical mass in three of its existing regions and also to expand into the Northern Home Counties, which will become its ninth operating region. The integration of the two businesses will move Miller's housebuilding operations into the UK's top ten largest housebuilders with expected annual housing completions of over 4,000 units and will raise Housing and Group turnover to around £0.7 bn and £1.1 bn respectively.
The transaction is expected to be immediately earnings enhancing. Miller will also benefit from the integration of the two businesses including the increased purchasing power of the combined organisation. The acquisition increases Miller's landbank by 6,493 plots and provides a combined landbank of 16,943 plots which equates to four years supply at current consumption levels.
"The acquisition has significant strategic benefits for Miller", advised Tim Hough, Chief Executive of Miller Homes:
- "it creates a sustainable UK housing business able to complete in excess of 4,000 units per annum;
- it gives Miller critical mass in four key operating regions in England, outside of its well-established operations in Scotland in the North West, Yorkshire, West Midlands and the South;
- it provides a platform for the creation of Miller's ninth housing operation in St Albans, covering the Northern Home Counties, which Miller had not expected to achieve before next year; and
- the acquisition of a 6,493 unit landbank to add to Miller's existing landbank of 10,450 units."
Commenting on the acquisition, Group Chief Executive Keith Miller said: "We have monitored Fairclough Homes for some time and are delighted to have acquired the business. It is a good strategic and geographic fit with our existing businesses, and has a strong management team and an excellent landbank.
"There is a very positive macro economic outlook for UK housebuilding with growing household formation, high home ownership aspirations, a high level of employment, and low interest rates. Going forward, we expect the industry to experience further consolidation and we will continue to play a leading part in this process."