Cala Group has acquired luxury housebuilder Banner Homes for £200m, in a deal that will propel the business into the UK’s top 10 housebuilders.
Cala Group chief executive Alan Brown said Banner Homes was “a perfect strategic fit” and added that the group will move into the tenth housebuilder spot “overnight”.
The deal, which Construction News understands was in the region of £200m, will increase Cala Group’s turnover to £500m for the year ending 30 June 2015.
In the longer term the group expects turnover to rise to £800m for the year to 30 June 2017, with an average property selling price of £400,000.
Mr Brown added: “We’ve been land-buying quite heavily for the last nine months and have been able to acquire a significant amount of land to be able to fit in with that [growth] plan.
“Together with the Banner acquisition, we now control more than 90 per cent of the land we need for 2017, so that plan is already underpinned by a significant landbank.”
Cala Group’s landbank stands at 10,770 plots, with a gross development value of £3.6bn, including 6,200 consented and 2,700 allocated plots. Banner Homes has 1,100 units.
Mr Brown said Cala Group had one of the largest landbanks in the industry, with six years’-worth of land under its control.
Banner Homes has 21 sites across three regional businesses in the northern and southern home counties and the Midlands, which will add to Cala Group’s operation in the South of England, the Midlands and Scotland.
During the 12 months to May 2013, Banner Homes sold 235 homes at an average selling price of £511,000. Its revenue for the period stood at £111m, with an operating profit of £16.4m at a gross margin of 24 per cent.
Cala Group announced the opening of two new offices in the South of England in February 2014, in north and south London.
Mr Brown said the Banner Homes acquisition would help to accelerate this regional expansion through Banner’s existing offices in Farnham and Beaconsfield.
Cala Group will take on 200 Banner Homes employees as part of the acquisition, bringing the combined company’s total headcount to 600 direct employees.
Mr Brown said he will aim to employ a further 50 members of staff over the next two to three years for the business in the South to support its growth plan for 2017.
Banner Homes chief executive Richard Werth will exit the company, as part of the terms of the acquisition, with all remaining Banner Homes senior managers joining the Cala Group team.
Cala Group was bought by investors Patron Capital and Legal & General in March last year in an equity and debt deal worth £210m.
The two investment businesses took a 46.5 per cent equity stake in Cala Group, alongside the company’s senior management, who took 7 per cent.
Cala Group said with the ongoing financial support of Patron Capital and Legal & General, it will continue to focus on securing and bringing forward new land for development.
The Banner Homes deal was facilitated with additional equity from Patron Capital, Legal & General and private equity group Electra, as well as an increased debt facility through new banking arrangements led by Bank of Scotland with Santander.
Additional investment from Banner Homes’ senior directors was also included, bringing the total management investment in Cala Group to £14m.