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M&A reports on businesses seeking acquisitions or to list on the markets in the coming months.

Featured companies:
Wren Homes plc
Brammer plc
DM plc
Halma plc

Wren Homes unveils ambitious growth plans

Retirement homes specialist Wren Homes Group plc plans to spend up to £50 million on acquisitions in the next 12 months, its managing director confirms.

Paul Treadaway said Wren is on the lookout for traditional residential developers with profits of around £1.5 million, with products that could be tailored for the retirement sector and could utilise the Wren brand and land sourcing expertise.

Treadaway said he would like to acquire regional businesses around England, which would give Wren national scope. He envisaged paying between £3.5 million and £7.5 million for any acquisition.

Wren, which moved to AIM from PLUS Markets in November 2006, recently posted promising interim results for the six months to January 31, 2007. The company made pre-tax profits of some £245,000, compared to a loss of more than £176,000 in the same period of 2005/6. The company’s share price has also risen to 70.5p from 36p at admission.

“We’re quite aggressive and we see the market in retirement [homes] as the way forward – we’ve been in it for a few years now and it’s an untapped world,” Treadaway said. “There are more retired people now than there [are] 16-year-old kids. There is a weight of money in that bracket – the grey pound is huge.”

Treadaway believes the sector is ripe for consolidation at the mid-market level after recent megadeals. These include the acquisition of retirement home specialist McCarthy & Stone by a consortium led by entrepreneurs Sir Tom Hunter and the Reuben brothers and HBOS for £1.1 billion in September last year.

“They’ve really taken out the top of the market and the middle ground,” he said. “There are a number of smaller firms and it really needs someone to take a bold step forward to grab the middle ground.

“We see ourselves uniquely placed to act as a consolidator because we’re the only quoted one left – after McCarthy & Stone [was delisted] – dedicated to retirement and sheltered housing.”
Daniel Parton

Brammer seeks bolt-on acquisitions

Brammer plc, which maintains and repairs production machinery, has raised almost £16 million through a share placing on the Main Market. The proceeds will fund organic and acquisitive growth and reduce Brammer’s debt.

Manchester-based Brammer placed some 4.8 million shares at 330p each to raise £15.8 million. Chief executive Ian Fraser and finance director Paul Thwaite each subscribed to 30,000 shares.

The placing follows Brammer’s £4.9 million acquisition of a 51% stake in Poland-based Fin S.A. in February and a 51% interest in Dublin-based Rotate in March. Both Fin and Rotate specialise in bearings and mechanical power transmission.

Brammer has made several bolt-on acquisitions that have already boosted profits. It recently stated that it is has more than eight deals in the pipeline. Including Fin and Rotate, the company expects to pay an initial £13.5 million for these deals, including acquired debt. It hopes to complete five acquisitions within its financial year, which ends on December 31, 2007.

Manchester-based Brammer made revenues of £314 million for the year ended December 31, 2006.
Rebecca Curwin

DM on acquisition hunt

Direct marketing group DM plc is on the lookout for potential takeovers, according to its chairman in the company’s recent final results.

DM, which has seen turnover rise by 61% and pre-tax profits increase by 89%, made two acquisitions in its last financial year. It bought Dodd Marketing for £9 million in April 2006 and the trading subsidiaries of telecoms provider Invox’s gaming division for up to £2 million in October 2006. The latter, which was loss making, has become profitable since joining DM.

Chairman Adrian Williams said: “We will continue to explore further complementary acquisition opportunities of both businesses and relevant databases.”

Ross on Wye-based DM reported a turnover of about £16.86 million and a pre-tax profit of some £3.96 million in the year ended December 31, 2006. The company specialises in home gaming through direct marketing.
Rebecca Curwin

Halma plans further acquisitions

Sensor technology business Halma plc is continuing its search for bolt-on acquisitions of smaller players, a spokesman for the company has confirmed.

A recent trading update said that while organic growth is the company’s main priority, its strategy “to make value adding acquisitions in closely targeted sectors is also progressing well”.

Halma’s spokesman told M&A Deals that any acquisitions would complement its existing health and safety sensor technologies, which includes infra-red lift door openings and remote monitoring of water flow. Any deal would probably cost under £10 million, the spokesman added.

This would follow three other recent acquisitions made by Halma. In November 2006, Halma acquired Tritech, a sub-sea safety monitoring business, for an initial £8 million. At the same time, it also bought System Technologies – Tritech’s design and product manufacturing partner – for £2 million. This was followed in February this year by the £7 million purchase of US-based Labsphere, which is now part of Halma’s photonics business in the health and analysis sector.

Halma, which is based in Amersham, Buckinghamshire, is well placed to make further acquisitions, having announced it is on course to meet market expectations for its yearly results, which are announced on June 19. In its last set of interims for the six months to September 30, 2006, the company posted pre-tax profits from its continuing operations of £30.6 million, a rise of 17% on the previous year, on the back of a £167.5 million turnover – itself up 19%.
Daniel Parton

Round up

While some companies are planning to continue their acquisition sprees, others have announced they are looking to grow by admission to one of the capital markets.

Publishing firm NPI Media, which has been on an aggressive growth strategy since it was formed by Alan Sutton in 2006, has more deals in the pipeline.

NPI, which acquired Sutton Publishing – a business formed by Sutton in 1978 – in February is now in talks with two other unnamed companies. This follows a recent reorganisation of NPI’s debt and equity and a refinancing of the group by GMAC Commercial Finance and an investment by Octopus Investments.

Following its deal with Sutton Publishing, NPI will publish more than 2,000 new titles this year. The company’s forecast annual turnover is £17 million and it has now become the largest heritage/regional interest publisher in the world with 200 employees.

In capital markets news, Manchester-based secure IT and Web services firm ANS Group plc has announced it intends to float its subsidiary, Smart Identity, on PLUS “in the near future”.

ANS owns 49% of Smart Identity, which specialises in identity management software development, such as smartcards, for the public sector. ANS also funds the business.

When contacted by M&A, a spokesman for ANS refused to confirm any further details for when the float is scheduled or if any capital will be raised by it.

Elsewhere, sandwich chain Pret a Manger is said to be considering floating on the London Stock Exchange in the next 18 months.

Press reports speculated that the company could have a capitalisation of up to £280 million. The move is will help to fund the company’s international expansion.

Pret considered a flotation in 2001, but pulled out and instead hooked up with fast food chain McDonald’s, which now owns a 33% stake in the company. In 2005, Pret filed pre-tax profits of some £10.8 million on a turnover of more than £157.3 million.

Nobody from Pret was available to speak to M&A Deals.
Daniel Parton

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