Breedon has agreed to acquire part of CEMEX operations in the UK.

The assets concerned include 49 ready-mix plants, 28 aggregate quarries, four depots, one cement terminal, 14 asphalt plants, and four concrete products operations across six divisions, located in Scotland, Wales, North-EastEngland, Norfolk, the East Midlands, and Yorkshire.

The deal also affects part of CEMEX’s paving solutions business as well as some inactive sites.

The transaction is worth £155million in cash together with the assumption of £23million of lease liabilities. It enhances Breedon’s position as an independent construction materials group in Great Britain and Ireland and substantially expands the group’s asphalt network,whilst increasing its complementary building products and contracting services businesses.

Breedon’s acquisition of those CEMEX’s UK Assets enables the group to bolt on assets in six regions of Great Britain and, in line with its strategy, further consolidates the heavyside construction materials industry. With the smaller end of the sector remaining highly fragmented, there remain further consolidation opportunities for the enlarged group in the future.

As a result of the move, 650 people will change employers and Breedon's mineral reserves and resources will increase by approximately 170 million tonnes, enough to last over 27 years at current extraction rates. This brings the enlarged group’s total mineral reserves and resources to more than 1 billion tonnes.

The company expects to achieve annual net pre-tax cost synergies of approximately £2 million by the third full year following completion of the sale, which is expected in the second quarter of 2020, subject to completion of a TUPE consultation process.

As would be expected for a transaction of this nature, Breedon will be notifying the transaction to the UK Competition and Markets Authority for clearance.

Pat Ward, Breedon’s Group Chief Executive, commented: “This is a unique opportunity to extend our national network through a single value-enhancing transaction, substantially increasing our footprint in several regions of Great Britain where we are currently under-represented. It also delivers a step-change in the development of our national asphalt strategy.

“There is potential to drive significant performance improvements across these new assets and they will also strengthen our platform for further organic growth and bolt-on acquisitions.

“In addition to the cost synergies we anticipate, we also expect the deal to be accretive to both earnings and free cashflow in the first full year, with a positive ongoing impact on the cash generation of the enlarged Group.”