Severfield has bought a Dutch steel contractor as it seeks to expand its European operations.
The North Yorkshire-based steel fabrication firm spent €24m (£21.2m) on the acquisition of Voortman Steel Construction Holding B.V. (VSCH), which is based in Rijssen, in the east of the Netherlands.
The acquisition will give Severfield a manufacturing base in Europe and will “open up attractive opportunities”, including access to the electricity distribution sector, which according to Severfield is “high growth”.
Severfield will also gain access to new clients in the industrial, commercial and residential sectors, it added. Currently, 96 per cent of Severfield’s European work comes from the UK, although the business also works in India.
In the year to 31 December 2021, VSCH recorded a revenue of €73.5m (£64.8m), equivalent to around 15 per cent of the £400m turnover reported by Severfield for 2021/22. Severfield said it expected its new Dutch business to be profitable by the year ending 31 March 2024.
The acquisition was funded by around €3m (£2.7m) of cash reserves and a €21m (£18.5m) loan, repayable over a five-year period.
Severfield chief executive Alan Dunsmore said the acquisition will help the contractor “continue to deliver on its growth strategy”.
“We believe that the combination of Severfield and VSCH will result in a broadening of our service offering and an ability to grow in different sectors and geographies,” he added.
“Not only is the acquisition of VSCH anticipated to be earnings-enhancing in its first full year of ownership, the transaction will further cement our position in a growing European market and provide opportunities for further profitable growth.”
Severfield expects to complete the acquisition by 3 April.
In the year to March 2022, the firm broke its revenue record for the second year running. Its success was largely down to its acquisition of East-Yorkshire-based steel fabrication company DAM Structures in February 2021.
At the time, Dunsmore noted that it was “well-positioned” to take advantage of “some significant opportunities in the industrial and distribution” market.
Dunsmore also predicted a strong 2023, pointing to the company’s order books of £486m in the UK and Europe, a 24 per cent increase on the £393m it booked in the previous year.