Informal approach made following share price collapse and announced departure of chairman
Ennstone, the ailing construction materials group, has entered into takeover talks with Marwyn Materials, an investment fund cash shell, the Financial Times has reported.
Marwyn is understood to have made an informal approach following a collapse in Ennstone's share price earlier this week and the announced departure of Vaughan McLeod, founder and executive chairman.
On Monday, Ennstone said that a deterioration in trading was forcing it to consider asset disposals in an attempt to deal with £200m of estimated net debt, adding that it was “actively considering” an equity issue.
The statement sent shares in the group down to 10p, the lowest in four years and more than 75% off their peak last November.
The news was followed by the resignation of McLeod, who founded the business in 1967, as executive chairman. He will remain as chief executive until a replacement can be found.
Speaking on Monday, McLeod said: “We need to put ourselves in a safer position by the end of the year. Life is tough; we recognise that.”
People close to the situation said no deal structure had been discussed, but that Ennstone's creditor bankers were expected to be “actively involved” because of its outsized debt.
Marwyn, an AIM-listed cash shell, has been looking for a base for an opportunistic “buy-and-build” strategy in the aggregates business since its launch in May.
The fund is likely to face competition for Ennstone, which is the last of the small aggregate providers in the UK following several waves of consolidation. It runs a string of quarries, concrete plants and contracting operations, as well as operations in the US and Poland.
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