Grafton, the builders' providers and Woodies DIY group, has sold its 50 per cent stake in British Dredging Aggregates (BDA) to RMC Group, the other 50 per cent holder, for £5.75 million sterling (£6.6 million). The stake was held by British Dredging plc (BD) which Grafton acquired two months ago. The consideration is in the form of a final dividend of £1.7 million from BDA and £4.05 million cash from RMC.
Both BD and RMC had put push options over the 50 per cent stakes and BD decided to exercise its option to force RMC to buy its holding. It was never Grafton's strategy to keep its shareholding in BDA, said Grafton's managing director, Mr Norman Kilroy, as it did not fit in with the rest of the group.
BDA had net assets of £2.4 million and generated a profit before tax of £1.6 million in 1997. The consideration (including the dividend) is at a premium to the net assets but it is on a very low profit multiple of 3.6.
Asked why the group did not negotiate a better price, Mr Kilroy said it was on a good multiple and the buy-out was based on a formula. "It was never in our plans to keep it."
The proceeds will be used by the group to refinance existing bank facilities. Prior to the bid for BD, Grafton had a 29.9 per cent stake in the publicly quoted British company. The bid valued BD at £35.3 million sterling. The offer was 193.6p cash sterling for every BD share.
