Business

Donaldson hails ‘transformational’ deal to acquire Stewart Milne firm

HISTORIC Fife timber merchant the Donaldson Group has hailed as “transformational” its acquisition of Stewart Milne’s timber-frame manufacturing business.

Donaldson has added more than 400 employees and a business that turns over £100 million to its fast-growing group with a deal that marks its first foray into the timber-frame market.

It is the biggest takeover in the history of Donaldson, which can trace its history back to 1860 and now includes 11 businesses spanning areas such as timber importing, sawmilling, wood product, insulation and kitchen manufacturing. Donaldson employs more than 1,500 people at 45 locations around the UK.

Stewart Milne Timber Systems (SMTS), which was established in 1975, operates throughout the country from three manufacturing sites, in Aberdeen, Witney in Oxfordshire, and a new facility in Falkirk. The sites will be retained by the new owner.

All 411 employees of the Milne business have transferred to Donaldson, including directors Alex Goodfellow and Rod Allan, and its operations will remain unchanged, a statement said.

Mr Goodfellow has been appointed chief executive of Donaldson’s off-site manufacturing business.

Asked how transformational the deal will be for Donaldson, chief executive Andrew Donaldson told The Herald: “This is transformational in terms of scale, as we’re adding a £100m business to the group. We’re also combining the biggest timber-frame manufacturer in the UK with the biggest timber engineering business in the UK (DTE).

“This is a unique offering and particularly exciting as the sustainability agenda becomes increasingly important.

“There has never been a more crucial time for timber frame and the sustainability element of this deal has been a major driver for us.”

The deal comes after Stewart Milne Group revealed in August that it had put the timber frame manufacturing division up for sale to focus on expanding its homes business across Scotland and north-west England. The group said then that it was “capitalising on Stewart Milner Timber Systems’ position … by putting the business up for sale at a time when the market is set to grow exponentially”.

Asked to what extent the deal reflected his company’s confidence in the housing market, Mr Donaldson replied: “This is an exciting time for the housing market, particularly with a push on low-carbon building. Sustainability is a major driver for us, and we want to play our part in building a sustainable future with a product that is good quality and also good for the environment. This is very important to us as a business, and we’re proud to be developing our offering further in this area.

“The timber-frame market is forecast to grow from 14 per cent to represent 25% of total housing construction market over next five years.”

Donaldson described SMTS as a “natural fit”, and said the acquisition will allow it to offer a stronger timber package to customers in the residential and commercial sectors.

“We’re delighted and proud to have successfully acquired this terrific timber-frame business,” Mr Donaldson noted. “This deal secures the future for a leading Scottish-based business, enabling the growth plans for it to reach its full potential, while providing reliability and stability for its existing and new customers.

“SMTS is a natural fit for the Donaldson Group. It offers a similar family-owned ethos, and has a strong reputation and track record for investment and innovation.”

Stuart MacGregor, chief executive of Stewart Milne Group, said: “This deal represents an exceptional outcome for both parties. The scale of the opportunity in the growing timber-frame market and the stellar growth of SMTS presented a highly compelling investment proposition and we are pleased to have found the right buyer who will continue to invest in the business and its people.

“The sale of SMTS will enable Stewart Milne Group to strengthen our investment in our thriving homes business which has seen record levels of sales in the last 18 months and, with our differentiated approach to place-making and new homes range, is now superbly positioned for future growth.”

The SMTS deal is the latest in a series concluded by Donaldson in the last two years. It has acquired Kitchens International, Stonecare, Rowan Manufacturing, and Smith and Frater since the start of 2020. The firm’s latest accounts show it made a pre-tax profit of £6.2m on turnover of £267.8m in the 18 months ended September 30, 2020.

The company is currently in the midst of a corporate rebranding that will change its name from James Donaldson & Sons to Donaldson Group. The new brand will launch in the New Year.

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