Wates to buy Shepherd businesses

Wates has agreed a deal to buy Shepherd Group’s facilities management and building services divisions, and also take over much of its construction business. The two companies have reached a preliminary agreement on the sale of Shepherd Engineering Services and Shepherd FM. In addition, Wates is also acquiring what is described as “a significant number of contracts and frameworks from Shepherd Construction Ltd”.

As previously reported, Shepherd launched a corporate review last December after difficulties in its loss-making construction division. Last week it announced the sale of its house-building operation, Shepherd Homes, to Galliford Try. [See previous report here.]

Despite being from opposite ends of the country – Shepherd from Yorkshire and Wates from Surrey – the companies consider themselves to have similar cultures. Both are family owned and can trace their roots back to the 19th century. It is expected that approximately 1200 of Shepherd’s 3,000 employees will transfer to Wates.

Shepherd said that following the sale it would focus on further developing the UK and European expansion of its Portakabin business. In effect, Shepherd is moving out of construction and into manufacturing, shedding two-thirds of its turnover in the process. However, Portakabin is where the profit is made and massive opportunities are envisaged in offsite construction.

Shepherd Group chairman David Williams said: “As a company with 125 years heritage, Shepherd Group has a strong history of adapting to market opportunities as they evolve. This deal would support our long-term growth strategy, providing exciting opportunities for the businesses retained in Shepherd Group as well as those involved in the proposed sale.

“The Shepherd Group board recognises that Shepherd Construction needs scale in order to capitalise on its full potential and the market opportunities arising out of its acknowledged technical capability. Our aim is to ensure the best possible future opportunity for all our businesses – and that includes Shepherd Construction, Shepherd Engineering Services and Shepherd FM. This transaction would also enable Shepherd Group to focus future investment on significant sustainable development opportunities such as the continued expansion of our Portakabin business.”

Wates Group chief executive Andrew Davies said: “The deal would form part of Wates Group’s long-term growth strategy to develop its Construction and Property Services businesses nationwide and build on the success of the company’s recent acquisition strategy. The acquisition of Shepherd Construction’s capability, Shepherd Engineering Services and Shepherd FM would complement and enhance our existing Construction and Property Services businesses, with access to additional areas of expertise in off-site construction, design for manufacture and assembly operations and expansion in new markets into the north of England. These additions to the Wates Group would complement and enhance our current expertise in the marketplace and allow us to move into new markets and realise our growth plans.”

The transaction is subject to all necessary due diligence being completed. The terms of the proposed deal have not been disclosed but a further announcement will be made in due course, the companies said.