Springfield in £46m swoop on Mactaggart & Mickel
Springfield Properties is acquiring the Scottish housebuilding business of Mactaggart & Mickel Group in a deal worth £46.3 million.
The acquisition comprises £10.5m cash paid on completion and deferred cash of £35.8m to be paid proportionally as homes are sold over the next five years.
It will be funded from Springfield’s internal resources and existing debt facilities with Bank of Scotland. Springfield intends to retain all of Mactaggart & Mickel’s housebuilding business employees.
The Elgin-based company has acquired six live private and affordable sites with work in progress with a fair value of approximately £15m and fixed assets.
It has also acquired a brand licence to build homes as Mactaggart & Mickel on a further 11 private and affordable sites, which will transfer to Springfield as homes are sold in line with the payments of the deferred consideration.
The total 17 sites, of which 16 have planning permission and equating to the delivery of c. 700 homes, have a gross development value of c. £2 30m. The group expects to generate gross margins on these sites materially in line with margins delivered by the rest of the group.
The acquisition also includes Timber Systems, a timber frame factory near Glasgow. The group already constructs 90% of its homes from timber kits and the addition of a second timber frame factory will secure kit supply and increase capacity for future growth while further reducing its carbon footprint. Springfield will retain all of Timber Systems’ employees.
In addition, Springfield and Mactaggart & Mickel have established a strategic alliance with an agreement that gives Springfield opportunities for future acquisitions of sites from Mactaggart & Mickel’s remaining land bank of approximately 2,300 acres across Scotland.
The housebuilding business of Mactaggart & Mickel is a premium brand housebuilder primarily targeting the larger private home market. The land bank is in highly desirable locations within the Central Belt of Scotland, expanding the Group’s footprint in areas with a higher price point.
The acquisition is expected to be earnings enhancing in the current year to 31 May 2023. For the year to 31 May 2022, the group expects to report results in line with market expectations, with good revenue growth and a better-than-expected reduction in net debt to c. £39.0m at year end (30 November 2021: £43.0m).
Further details will be provided in the group’s full year results announcement, which is expected in September.
Innes Smith, chief executive of Springfield Properties, commented: “We are very pleased to welcome Mactaggart & Mickel’s Scottish housebuilding business into the Springfield Group.
“As well as bringing another premium brand into the group, this acquisition gives us land, with planning permission, in areas of significant demand.
“The structure of the acquisition – with the majority of the payment to be made as homes are completed – de-risks the deal and creates an effective and efficient means of acquiring land.
“The addition of a timber frame facility in the Central Belt, alongside our existing facility in Elgin, secures our supply of timber kits and provides further capacity to support our next stage of growth. It will also r educe our carbon footprint by enabling local manufacture of all kits.”
Paul McAninch , group finance director at Mactaggart & Mickel , added: “We welcome this agreement with Springfield, which we believe provides a strong platform for growth for both parties.
“Our company has had a proud tradition as a leading housebuilder in Scotland, which is built on the work of its dedicated teams.
“This tradition will continue, and I’m pleased that there will be continuity of employment as a result of this agreement. I’d like to thank all our staff for their dedication over the years as we look to our second century as a successful business. I’d also like to wish transferring colleagues every success for their future.”