North-east firm Stewart Milne Group (SMG) has sold its house kit business to Fife-based timber giant James Donaldson & Sons.
The value of the deal is undisclosed, but in October, when it announced it was offloading Stewart Milne Timber Systems (SMTS), SMG said the subsidiary was turning over £100 million a year.
It comes just a few weeks after SMG’s flagship housing project, the £800m Countesswells scheme in the west of Aberdeen, was rocked by developer Countesswells Development Limited (CDL) – a wholly-owned subsidiary of SMG – collapsing into administration.
Double blow felled business
CDL’s directors blamed disruption caused by the oil and gas downturn, as well as the Covid-19 pandemic.
SMTS employs about 410 people across operations in Westhill, near Aberdeen, Uddingston, near Glasgow, and Witney, in Oxfordshire.
According to Westhill-based SMG, the timber frame business is the “undisputed” UK market leader, with around a 20% share.
The group has also pointed to “stellar” growth at SMTS in the past five years, thanks to “strong customer relationships” with the likes of Barratt, Taylor Wimpey and Cala, as well as a current order book of nearly £300m.
The last published accounts for SMG revealed turnover of £65m at SMTS during the year to October 2020, down from a like-for-like 12 month comparison of £95m in 2019, as a direct result of the shut-down of sites and factories during the first Covid lockdown.
SMG chief executive Stuart MacGregor said the sale of SMTS allowed the group to strengthen investment in its “thriving” homes business.
Housebuilding subsidiary Stewart Milne Homes has achieved record levels of sales during the past 18 months, he said.
‘Huge opportunities’
Mr MacGregor added: “This deal represents an exceptional outcome for both parties.
“The scale of the opportunity in the growing timber frame market and the stellar growth of SMTS presented a highly compelling investment proposition, and we are pleased to have found the right buyer who will continue to invest in the business and its people.”
SMTS managing director Rod Allan said: “Being part of one of the UK’s leading timber-based group of companies will offer huge opportunities that will benefit our people, our customers and our other key stakeholders.”
This deal represents an exceptional outcome for both parties.”
Stuart MacGregor, CEO, Stewart Milne Group.
Glenrothes-headquartered Donaldson employs more than 1,500 people across 45 operations throughout the UK.
The group has been under family ownership since it was established more than 160 years ago.
Its subsidiaries include Aberdeen-based Nu-Style Products, which designs, manufactures and supplies a wide range of products to building and construction specialists across Scotland, and increasingly in England.
SMTS is a natural fit for the Donaldson group.”
Andrew Donaldson, CEO, James Donaldson & Sons.
SMTS marks Donaldson’s entry into the timber frame market for the first time.
Announcing the acquisition, group chief executive Andrew Donaldson said: “This deal secures the future for a leading Scottish-based business; enabling the growth plans for it to reach its full potential, while providing reliability and stability for its existing and new customers.
“SMTS is a natural fit for the Donaldson group; it offers a similar family-owned ethos, and has a strong reputation and track record for investment and innovation.”
“The use of timber frame is anticipated to double in the next five years as housebuilders turn to modern methods of construction and renewable sources to achieve crucial net-zero carbon targets.”
All staff and operations will continue unchanged, the Fife group said.
Alex Goodfellow, managing director, strategic development, SMG, will become chief executive, off-site manufacturing for Donaldson.
He will join SMTS managing director Rod Allan and the rest of the current board at the timber frame firm in continuing to drive the business, Donaldson said.
SMG bullish despite losses
In August, SMG reported strong demand for new homes across the north-east, as well as in the central belt and north-west England.
But the company also announced pre-tax losses of £71.5m during the Covid-impacted year to October 31 2020.
Turnover of £269.7m – compared with £379m in the previous 16 months – effectively reflected fewer than eight months of “normal” trading, with operations halting for four months during the first pandemic lockdown.
Performance during the latest period was affected by the revaluation of land acquired prior to the 2008 global financial crisis and before the oil and gas downturn in 2015.