Wates eyes expansion, while Shepherd Group focuses on modular builder Portakabin

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Wates has bought the bulk of Shepherd Group’s construction business - so what does the deal mean for both firms?

Wates confirmed today it has bought Shepherd Group’s engineering services and facilities management businesses, as well as most of Shepherd Construction’s contracts, for an undisclosed sum.

This leaves Shepherd Group with just its fast-growing Portakabin Group of modular building companies, and engineering products businesses Portastor and Portasilo, following the sale of housebuilding division Shepherd Homes to Galliford Try earlier this month.

Wates Group

The deal fits into Wates’ stated ambition to double its revenue to £2bn, from £1.05bn reported in the 2014 calendar year. Both Wates and Shepherd Group’s management teams believe the Shepherd construction businesses have found a good home at Wates - both are family-owned and thought to have similar values and culture. The deal enables Wates to grow its business in the north of England and gives it extra manpower and expertise that can be redeployed in the south if needed. The engineering services and facilities management divisions enable Wates Group to strengthen and broaden its service capability.

Shepherd Group

Shepherd Group’s strategy following a review of the business it commenced in December has been to sell off its construction divisions to focus on expanding Portakabin in the UK and Europe. The deal with Wates repositions the firm out of construction and into manufacturing. The Portakabin group of companies - which includes Yorkon, Foremans Relocatable Building Systems and Konstructa Hire - posted a 32% increase in pre-tax profit to £29.8m in the year to June 2014, up from £22.6m, while revenue increased 18% to £218.9m, up from £185.4m. Demand for off-site construction methods and modular building is increasing, with developers attracted by the prospect of faster and cheaper construction projects. Consequently Shepherd Group’s management believe the potential for the sector is immense.

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