Brookfield has expanded its home improvement investment with a $ 6.5 billion purchase of UK HomeServe
Brookfield Asset Management BAM-A-T has agreed to buy British-based firm HomeServe for £ 4.08 billion, or $ 6.521 billion, to add a large housing service business that fits in with its home improvement owners.
In a statement Tuesday, Brookfield said it would pay £ 12 per HomeServe share and cash through Hestia Bidco Ltd., an indirect subsidiary of Brookfield Infrastructure Partners. GDP manages approximately US $ 140 billion in assets across the real estate, infrastructure and renewable energy sectors.
If approved by shareholders, the unwanted acquisition would stop HomeServe’s 18-year run on the London Stock Exchange. The repair company, based in Walsall, England, offers a range of heating, cooling, electrical and sanitary services including boiler replacement and appliance repair. It currently operates in North America, Europe and Asia.
The acquisition builds on Brookfield’s move to capitalize on a global push toward energy efficiency, with HomeServe offering services to homeowners to help make their homes greener.
“We look forward to supporting the continued growth of HomeServe worldwide as critical residential infrastructure is improved in the coming years to drive decarbonization and improve energy efficiency,” Brookfield Infrastructure Managing Partner Sikander Rashid said in the release.
U.K.’s HomeServe and talks with Brookfield for possible offer
HomeServe recently began offering electric vehicle chargers, and said in its 2021 annual report that it will continue to grow its green utilities.
In a recent analyst call, Samuel Pollock, head of Brookfield’s Infrastructure Group, said the company is developing its residential infrastructure business in line with a push toward solar and other renewable energies.
“We think that as a trend towards decarbonisation continues, and many new more expensive components are being introduced to consumers to facilitate the reduction or conversion of conventional fuels, customers will need some help,” he said. Pollock Early May.
In 2020, Brookfield completed the full acquisition of TerraForm Power, a wind and solar company based primarily in the United States, after acquiring 51 percent of the company in 2017.
HomeServe will significantly expand the company’s presence in the home improvement market, building on Brookfield’s $ 4.3 billion acquisition of Canadian home improvement service provider Enercare in 2018.
In its 2021 annual report, HomeServe said its North American HVAC business represents the company’s largest short-term growth potential, with a 27 percent increase in adjusted operating profit over the previous year.
The offer price would represent a 71 per cent rise in the HomeServe closing price of £ 7 on March 23, the last day before HomeServe announced it would begin talks with Brookfield, according to the release. HomeServe’s share price reached a high of £ 13.6 per share early in the pandemic as home improvement spending rose, but fell as blockchain was lifted in the UK, to a five-year low of £ 6.3 per share in March.
HomeServe said its directors “intend to recommend the deal unanimously” to shareholders, calling the terms of the offer “fair and reasonable.”
Chief Executive Officer Richard Harpin said in a statement that he was “delighted” at Brookfield’s commitment to providing long-term capital and global expertise.
Brookfield said it had received irrevocable commitments – binding agreements to vote for a takeover – from the directors and Mr Harpin’s wife Kate, representing about 13 per cent of the extraordinary shares.
But some analysts in the UK have said the deal leaves room for a competing offer. Joe Brent, Chief of U.K. Small & amp; Mid-cap research at investment bank Liberum, said the wording in the publication – that the directors “intend” to recommend the offer – says that “the door is open for another offer.”
HomeServe said it expects the vote to take place during its July general meeting, and that the deal will close in the fourth quarter of this year.
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