Springfield Properties acquires Livingston housebuilder Walker Group

Scottish housebuilder Springfield Properties has bought Livingston-based Walker Group for £31 million.

Funded from Springfield’s existing cash balances and borrowing facilities with Bank of Scotland, the acquisition of the entire share capital of Walker Holdings (Scotland) expands the Elgin-based firm’s land bank and sales presence in the Edinburgh commuter belt.

Springfield Properties acquires Livingston housebuilder Walker Group

Springfield Properties CEO Innes Smith

In addition, while Walker does not currently build affordable housing, Springfield said the development of its current land bank will require at least 346 affordable homes to be built, representing an opportunity for the group’s affordable housing division.

Walker focuses on private housing in the commuter belt, primarily building private homes with two to five bedrooms. Its developments generally comprise between 50 and 200 homes though it also delivers larger, multi-phased schemes. Five active sites with a gross development value (GDV) of £100m are under development by Walker and it has five further sites in the pipeline with a GDV of over £300m.

Springfield said the acquisition is in line with the group’s stated strategy of expanding its land bank and sales presence. The acquisition makes use of and exceeds the group’s budget for its current financial year for land purchases. Springfield sees Walker as having a highly complementary land bank and sales presence and its directors believe that the purchase will complement last year’s acquisition of Dawn Homes, which gave Springfield similar access to Glasgow’s commuter belt.

The enlarged group will retain Walker’s premises in Livingston, all of the company’s 50 staff and the Walker brand. Peter Matthews, Springfield’s managing director for Central Scotland (private housing), will take over the responsibility of running the Walker business.

Sandy Adam, executive chairman of Springfield, said: “We are very pleased to have completed this acquisition and welcome Walker Group’s employees and customers to Springfield. Walker Group has a reputation for building excellent homes in great locations. The ethos among employees and the quality and location of the land bank are a great fit for Springfield.

“The acquisition has enabled us to diversify our land bank with sites at various stages of planning and development in East Central Scotland, where we have been looking to strengthen our foothold. We are pleased to have efficiently delivered a large proportion of our land-buying plans for the wider Edinburgh area, adding 10 sites to our land bank in one deal rather than with multiple individual deals. Walker’s active sites bring an immediate sales presence in new locations and the sites in the pipeline further strengthen our land bank and enhance our quality of earnings.

“The acquisition of Walker supports Springfield’s growth aspirations with land and skilled employees. It enables us to deliver housing more widely across Scotland at a time when supply continues to fall well short of demand and average house price growth in Scotland is ahead of the rest of the UK. Interest rates are low, mortgage availability is good, barriers to new entrants are high and Springfield is well positioned to benefit.”

Innes Smith, CEO of Springfield, added: “The positive experience we have had with the acquisition and integration of Dawn Homes last year makes us confident that an established company with great people, product and reputation like Walker will be a further positive addition to our group. This bulk addition to our land bank also gives us very good visibility in our three-year projections.

“Last year we strengthened our management structure with investment in four high calibre MDs responsible for distinct geographic areas. Peter Matthews, MD of Springfield Central Scotland, will take charge at Walker, adding to the Springfield developments for which he is already responsible. We look forward to working with the Walker team and continuing to grow our business.”

Springfield has paid an initial net consideration of £21m in cash. The remainder will be paid in stages, with £6m tied to the planning consent for a site at Carlaverock, Tranent.

Approximately £4m in general deferred consideration, payable in equal amounts on the first and second anniversary of the completion of the acquisition. Springfield has the option to satisfy this either in cash or shares in Springfield Properties plc. The group will acquire £41.4m of cash in Walker, as part of the gross consideration of £72.4m.

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