Wates eyes expansion, while Shepherd Group focuses on modular builder Portakabin

Handshake

Wates has bought the bulk of Shepherd Group鈥檚 construction business - so what does the deal mean for both firms?

it has bought Shepherd Group鈥檚 engineering services and facilities management businesses, as well as most of Shepherd Construction鈥檚 contracts, for an undisclosed sum.

This leaves Shepherd Group with just its fast-growing Portakabin Group of modular building companies, and engineering products businesses Portastor and Portasilo, following earlier this month.

Wates Group

The deal fits into Wates鈥� stated ambition to double its revenue to 拢2bn, from 拢1.05bn reported in the 2014 calendar year. Both Wates and Shepherd Group鈥檚 management teams believe the Shepherd construction businesses have found a good home at Wates - both are family-owned and thought to have similar values and culture. The deal enables Wates to grow its business in the north of England and gives it extra manpower and expertise that can be redeployed in the south if needed. The engineering services and facilities management divisions enable Wates Group to strengthen and broaden its service capability.

Shepherd Group

Shepherd Group鈥檚 strategy following a review of the business it commenced in December has been to sell off its construction divisions to focus on expanding Portakabin in the UK and Europe. The deal with Wates repositions the firm out of construction and into manufacturing. The Portakabin group of companies - which includes Yorkon, Foremans Relocatable 黑洞社区 Systems and Konstructa Hire - posted a 32% increase in pre-tax profit to 拢29.8m in the year to June 2014, up from 拢22.6m, while revenue increased 18% to 拢218.9m, up from 拢185.4m. Demand for off-site construction methods and modular building is increasing, with developers attracted by the prospect of faster and cheaper construction projects. Consequently Shepherd Group鈥檚 management believe the potential for the sector is immense.

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