Archived article
Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.
magazineMarshalls’ £535 million Marley deal set to ‘transform’ earnings growth
Marshalls (MSLH) 665p
Gain to date: 4.1%
Original entry point: Buy at 638.5p, 25 February 2021
Building products group Marshalls (MSLH) has taken a big step towards its strategic goal of becoming the UK’s leading maker of building products with the £535 million acquisition of Marley.
Marley, a leading supplier of roofing products, is highly profitable, generating an EBITDA (earnings before interest, tax, depreciation and amortisation) margin of over 20% throughout the pandemic, above Marshalls’ own margin.
The purchase price, which represents a multiple of 10.7 times EBITDA, isn’t expensive for a business which will boost Marshalls’ earnings growth by double digits in the first full year after completion.
The deal looks well-timed too, given the continued strength of the repair, maintenance and improvement market and the boom in demand for new housing.
Marshalls is financing the purchase through a mixture of cash and new equity which means an increase in the number of shares in circulation.
Crucially, Marley’s long-standing management team will remain with the business and they are not allowed to sell their new shares in Marshalls for six months.
SHARES SAYS: The acquisition makes strategic and financial sense. Keep buying the shares.
Important information:
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell Youinvest.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
Issue contents
Feature
- Looking for an ESG investment? They tend to fall into six different baskets
- Is your favourite investment trust in safe hands?
- Stocks and funds which could power up on nuclear's glowing prospects
- Why there is more to come from AstraZeneca as its shares hit a new record high
- Make your money work harder: invest your cash to stop it being eaten away by inflation
- This is why shares in ITV have been a bad investment for years
