Brookfield expands home improvement holdings with $6.5 billion acquisition of UK HomeServe

Brookfield Asset Management BAM-AT has agreed to buy UK-based HomeServe for £4.08 billion, or $6.521 billion, adding a major home services business that matches its home improvement holdings.

In a statement on Tuesday, Brookfield said it would pay £12 per HomeServe share in cash through Hestia Bidco Ltd., an indirect subsidiary of Brookfield Infrastructure Partners. BIP manages approximately $140 billion in assets across the real estate, infrastructure and renewable energy sectors.

If approved by shareholders, the unsolicited acquisition would end HomeServe’s 18-year run on the London Stock Exchange. The repair business, based in Walsall, England, offers a range of heating, air conditioning, electrical and plumbing services, including boiler replacement and appliance repair. It currently operates in North America, Europe and Asia.

The acquisition builds on Brookfield’s decision to capitalize on a global push towards energy efficiency, with HomeServe offering services to help homeowners green their homes.

“We look forward to supporting HomeServe’s continued growth globally as critical residential infrastructure is upgraded in the coming years to drive decarbonization and improve energy efficiency,” said Sikander Rashid, Partner director of Brookfield Infrastructure, in the press release.

UK’s HomeServe in talks with Brookfield over potential bid

HomeServe recently began offering electric vehicle charger installations and said in its 2021 annual report that it will continue to grow its green utilities.

On a recent analyst call, Samuel Pollock, head of Brookfield’s infrastructure group, said the company was expanding its residential infrastructure business in line with a push toward solar and other renewables.

“We believe that as the decarbonization trend takes hold and many new, more expensive components are introduced to consumers to facilitate downscaling or conversion from conventional fuels, customers will need support, Mr Pollock said in early May.

In 2020, Brookfield completed the full acquisition of TerraForm Power, a wind and solar company located primarily in the United States, after buying 51% 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 services provider Enercare in 2018.

In its 2021 annual report, HomeServe said its HVAC business in North America represented the company’s biggest near-term growth opportunity, with a 27% increase in adjusted operating profit year-on-year. previous.

The offer price would represent a 71% premium to HomeServe’s closing price of £7 on March 23, the last day before HomeServe announced it was entering talks with Brookfield, the statement said. HomeServe’s share price peaked at £13.6 per share at the start of the pandemic as home renovation spending rose, but fell as lockdowns in Britain were lifted, falling to a five-year low of £6.3 per share in March.

HomeServe said its directors “intend to unanimously recommend” the deal to shareholders, calling the terms of the offer “fair and reasonable.”

Chief executive Richard Harpin said in a statement that he was “delighted” with Brookfield’s commitment to providing long-term capital and global expertise.

Brookfield said it received irrevocable undertakings – binding agreements to vote in favor of a takeover – from directors and Mr Harpin’s wife, Kate, representing about 13% of the outstanding shares.

Still, some UK analysts said the deal leaves some leeway for a competing bid. Joe Brent, head of UK small and mid-cap research at investment bank Liberum, said the wording of the statement – that the directors “intend” to recommend the offer – suggests that “the door is open to another offer”.

HomeServe said it expects the vote to take place at its general meeting in July and the deal to close in the fourth quarter of this year.

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