Acquisition

Breedon Group plc ("Breedon" or the "Group"), a leading vertically-integrated construction materials group in Great Britain, Ireland and the United States, announces the acquisition of Lionmark Construction Companies LLC ("Lionmark") for an enterprise value of US$238m (£187m1) (the "Transaction").

Strategic Highlights

• Lionmark is a leading Missouri headquartered construction materials and surfacing solutions business with a focus on road infrastructure end markets.
• Expected to more than double Breedon's US revenue, increasing vertical-integration and diversifying our US product offering into asphalt and surfacing.
• Benefits from attractive markets, with growing demand underpinned by structural increases in transport infrastructure investment and Lionmark's long-standing relationships with state transport authorities and large contractors.
• Strong cultural fit, high quality management team and a complementary asset base facilitating a straightforward integration into BMC, Breedon's existing US platform.
• Transaction expected to provide immediate and attractive financial returns while maintaining a strong and flexible balance sheet.

Financial Highlights

• In the twelve months ended 30 November 2024, Lionmark recorded unaudited revenue of US$246m and unaudited adjusted EBITDA2 of US$31m.
• Headline enterprise value represents c.7.7x 2024 unaudited adjusted EBITDA2.
• Synergies of not less than US$3m per annum expected to be fully delivered by the third year of ownership.
• Asset backed with c.100 million tonnes3 of reserves and resources.

Transaction Highlights

• c.US$226m payable in cash on completion, subject to customary adjustments and retentions, funded through a draw down on Breedon's existing Revolving Credit Facility.
• c.US$12m payable in Breedon shares, to be retained by the Vendors for a minimum of twelve months following Completion.
• Completion is expected to occur by 7 March 2025; subject to customary closing conditions
• Expected to be immediately earnings enhancing4; ROIC to cover WACC by end of 2027.
• Post-acquisition pro-forma Covenant Leverage for the Group of c.1.9x5; in line with our financial framework.

Andy Arnold, Managing Director, Breedon US, commented:

"The acquisition of Lionmark represents a significant milestone in the development of our US business. Lionmark is extremely complementary to our existing operations, diversifying BMC's product to supply asphalt and surfacing solutions into an attractive market which is well-positioned for future growth."

Rob Wood, Chief Executive Officer, commented:

"The acquisition of Lionmark will more than double our US revenue, is expected to be immediately earnings enhancing for shareholders while allowing Breedon to maintain a conservative and flexible balance sheet to pay dividends and make further bolt-on acquisitions across each of our platforms as opportunities arise.

"In a year we have built a US business of scale that is already on a pro-forma basis the equivalent size of our Irish business. We are delighted to welcome our new colleagues to Breedon and look forward to working with them as we continue to expand Breedon's presence in the United States."

Notes:

• GBP: USD Exchange Rate of 1:1.27.
• Lionmark financials have been extracted from the management accounts of Lionmark and adjusted for items which will not reoccur under Breedon ownership. Lionmark financials are unaudited and have been prepared under US GAAP so may not be directly comparable to Breedon financials which are prepared under IFRS.
• Breedon and Lionmark's best estimate of Lionmark's reserves and resources at the date of this announcement, expressed as metric tonnes.
• ROIC: post-tax return on average invested capital
• Pro-forma Covenant Leverage is the Covenant Leverage of the Group calculated assuming the transaction had completed on 31 December 2024. Covenant Leverage is defined as the ratio of Underlying EBITDA to Net Debt, with both Underlying EBITDA and Net Debt amended to reflect the material items which are adjusted by the Group and its lenders in determining leverage for the purpose of assessing covenant compliance.

Additional information

Lionmark Overview

Founded in 1932 and headquartered in St Louis, Missouri, Lionmark is a leading regional construction-materials and surfacing business with a particular focus on road infrastructure end-markets.

In the twelve months ended 30 November 2024, Lionmark recorded unaudited Revenue of US$246m and unaudited adjusted EBITDA of US$31m, derived from its multi-state surfacing operations which are supported by eight quarries, four asphalt plants and a bitumen import and processing facility, alongside c.400 colleagues.

During 2024, 72% of Lionmark's revenue arose in Missouri, 17% in Texas, 8% in Arkansas and the remainder in the surrounding states.

Missouri, has the sixth largest road network in the US, with 213,000 miles of highway of which c.90% are asphalt. Texas has the largest transportation funding programme in the US, supported by a share of oil and gas production taxes, with US$104bn of total transport infrastructure spend announced in 2024 over the next ten years. More broadly, as at December 2024 only c.34% of the committed c.US$375bn Federal IIJA highway investment had been deployed.

Lionmark has a strong order book for 2025 with a backlog of over US$210m, and significant projects in the pipeline including upgrades to the I-70 and I-44 interstate highways, alongside routine construction and maintenance work.

Lionmark is owned by its senior operational management team (the "Vendors"). Following the transaction, the majority of the Vendors will remain with the business.

Transaction Structure

Cash consideration of c.US$226m (£178m), subject to customary adjustments and retentions, is being funded by way of a draw down under Breedon's existing multicurrency RCF.

c.US$12m (£9.5m) is payable in the form of 2.1m Breedon shares (the "Shares") to be issued to the Vendors, who have undertaken to retain all the Shares for a minimum period of twelve months from completion. Application will be made in due course for the Shares to be admitted to the Official List of the Financial Conduct Authority and to trading on the Main Market of the London Stock Exchange.

Completion is expected to occur by 7 March 2025; subject to customary closing conditions.

The Transaction is expected to be immediately earnings enhancing.

Lewis Rice acted as legal adviser to Breedon on the transaction.