Tie-up: Andrew Donaldson and Alex Goodfellow

Stewart Milne Timber Systems has been acquired by the Donaldson Group in a move that extends its interests in a growing segment of the market.

Donaldson says the acquisition “strategically and operationally” complements its portfolio, allowing it to offer a stronger timber package for residential and commercial applications.

The use of timber frame in housing construction is expected to double in the next five years from 14% to 25% as house builders turn to modern methods of construction and renewable sources to achieve net-zero carbon targets.

SMTS, established in 1975 as a division of Stewart Milne Group, is a UK pioneer in timber frame technology and manufacturing. It operates throughout the country from three manufacturing plants in Aberdeen, Witney and a new facility in Falkirk.

It has experienced 79% growth in the last six years, with a record order book of close to £300m and an annual turnover of £100m, giving it a 20% share of the market. The business is trading significantly ahead of its expectations at the start of the financial year.

The business, which was put up for sale in October, has strong customer relationships with blue chip builders such as Barratt, Cala and Taylor Wimpey.

The £400m-turnover Donaldson Group sees it adding significantly to its 11 specialist timber and building product businesses, operating throughout the UK from 45 locations with a headcount 1,500. 

The deal will see Alex Goodfellow, Stewart Milne Group managing director – strategic development, become CEO, Donaldson Off-site Manufacturing. The 411 employees at SMTS will transfer to Donaldson. Financial terms were not disclosed.

Donaldson has 160 years of expertise in timber importing and distribution, as well as decades of experience in timber engineering and merchanting.

In the last two years it has acquired Kitchens International, Stonecare, Rowan Manufacturing and Smith and Frater.

Andrew Donaldson, CEO of the Donaldson Group, said: “This deal secures the future for a leading Scottish-based business.

“SMTS is a natural fit for the Donaldson Group; it offers a similar family-owned ethos, and has a strong reputation and track record for investment and innovation. We’re pleased to welcome all 411 employees to our family business and look forward to working closely with Alex and the full team.

“This is an exciting move for the Donaldson Group, as we venture into the timber frame market at a time when interest in the material has never been higher.”

Mr Goodfellow, said: “We have secured the perfect partner who is committed to our growth strategy and who will support us to achieve our vision.

“The Donaldson Group has a strong reputation for partnerships, reliability and integrity and we are clearly aligned both strategically and operationally which can only help strengthen our market-leading position.”

Stuart MacGregor, chief executive of Stewart Milne Group, said: “This deal represents an exceptional outcome for both parties.

“The scale of the opportunity in the growing timber frame market and the stellar growth of SMTS presented a highly compelling investment proposition and we are pleased to have found the right buyer who will continue to invest in the business and its people.

“The sale of SMTS will enable Stewart Milne Group to strengthen our investment in our thriving homes business which has seen record levels of sales in the last 18 months and, with our differentiated approach to place-making and new homes range, is now superbly positioned for future growth.”