Springfield acquires Walker Group in £31 million deal
Sandy Adam, chairman, and Innes Smith of Springfield Properties with Bruce Walker(centre) of Walker Group
Springfield Properties has acquired Walker Holdings (Scotland), a Livingston-based housebuilder focused on Edinburgh’s commuter belt, in a £31 million cash deal.
The company also acquires £41.4m of cash held by Walker whose developments generally comprise between 50 and 200 homes. It is currently developing five sites with a gross development value of £100m and has five further sites in the pipeline with a GDV of over £300m.
The acquisition is in line with Springfield’s stated strategy of expanding its land bank and sales presence. Springfield says Walker has a “highly complementary” land bank and sales presence, in he commuter belt surrounding Edinburgh.
The directors believe that the acquisition will complement last year’s acquisition of Dawn Homes, which gave Springfield access to land and a sales presence in Glasgow’s commuter belt.
Further, Walker does not currently build affordable housing whereas development of its current land bank will require at least 346 affordable homes to be built, which represents an opportunity for Springfield’s Affordable Housing division.
The Group will retain Walker’s premises in Livingston, all of the company’s 50 staff and the well- known Walker brand. Peter Matthews, Springfield’s Managing Director for Central Scotland (Private Housing), will take over the responsibility of running the Walker business.
Following the acquisition, the Group is currently operating on 43 sites.
The addition of the Walker land bank provides greater visibility over the Group’s projections for the next three financial years and the Acquisition is expected to enhance earnings from the current financial year.
Sandy Adam, Executive Chairman of Springfield, said: “We are very pleased to have completed this acquisition and welcome Walker Group’s employees and customers to Springfield. 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 10 sites to our land bank in one deal rather than with multiple individual deals. Walker’s active sites bring an immediate sales presence in new locations and the sites in the pipeline further strengthen our land bank and enhance our quality of earnings.
“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. Interest rates are low, mortgage availability is good, barriers to new entrants are high and Springfield is well positioned to benefit.”
Innes Smith, CEO of Springfield, said: “The positive experience we have had with the acquisition and integration of Dawn Homes last year makes us confident that an established company with great people, product and reputation like Walker will be a further positive addition to our group. This bulk addition to our land bank also gives us very good visibility in our three-year projections. Last year we strengthened our management structure with investment in four high calibre MDs responsible for distinct geographic areas.
- Under the terms of the Acquisition, the Group has paid an initial net consideration of £21.0 million in cash
- The remaining consideration of up to £10.0 million will be payable as follows:
- £4.0 million on receipt of planning consent at a site at Carlaverock, Tranent to be satisfied wholly in cash
- £2.0 million on receipt of detailed planning consent on all of the sites at Carlaverock, Tranent to be satisfied wholly in cash
- Approximately £4.0 million (subject to finalisation of accounts) in general deferred consideration, payable in equal amounts on the first and second anniversary of the completion of the Acquisition. Springfield has the option to satisfy this either in cash or shares in Springfield Properties plc
- The Group will acquire £41.4 million of cash in Walker, as part of the gross consideration of £72.4 million