The strategic acquisition of Cygnum reflects the increased use of modern methods of construction in the Irish market, as the Government chases a target of building 300,000 houses by 2030.
Cygnum, which was established in 1997 and is based in Macroom, had revenues last year of approximately €45.6m, and its adjusted operating profit was expected to be €7.9m. This suggests an adjusted operating margin of just over 17pc.
No financial details were revealed, but Grafton said the deal is expected to be earnings-enhancing in its first full financial year.
Cygnum’s management team will remain with the business and is being incentivised to increase profitability in line with some performance conditions.
Modular construction is an increasingly popular feature of the Irish market, as it is actively encouraged by the Government, which is trying to speed up the delivery of residential homes.
The proportion of timber-frame constructions used in low-rise housing estates was 37pc in 2019, but the most recent figures from the Department of Housing suggest that had risen to 61pc in the second half of last year.
Provided that the deal is approved by the Competition and Consumer Protection Commission (CCPC), Grafton said it intends to operate Cygnum as part of the Chadwicks group. A distributor of building materials, Chadwicks has 64 branches in the Republic of Ireland.
Grafton also owns the DIY and gardening retailer Woodie’s.
“This acquisition aligns with Chadwicks Group’s strategy to extend its offering and acquire adjacent competencies, and allows it to continue to be a one-stop shop for customers as they adopt modern methods of construction,” a statement from Grafton said.
Eric Born, the chief executive of Grafton, said it was pleased to acquire a well-established business with an experienced management team.
“This acquisition strongly complements Chadwicks’ trade portfolio and supports the faster, more efficient delivery of new homes to help address Ireland’s structural housing shortage,” he said.
“For Grafton, it provides an opportunity to increase our exposure to the new-build market and to support Cygnum customers with access to a broader range of construction related products and solutions.”
Davy’s have estimated that Cygnum should add about 3.5pc to Grafton’s operating profit base over a full year.
“Grafton exited 2025 with net cash ex-leases of £274m following yet another year of impressive free cashflow production. Hence, the group clearly has ample financial capacity, and it is positive that Grafton is deploying capital in what we expect will be a value accretive fashion,” Davy’s analysis said.
“Indeed, we believe further deals over the remainder of the year and beyond are likely.
“Cygnum itself will be a usual stimulus to Grafton. Over a full year, we estimate the deal will add circa 1.5pc to group revenues and approximately 3.5pc to adjusted operating profit.”
Goodbody said this was a “shrewd” acquisition by Grafton, “as it continues to build upon its already market-leading building distribution presence in the buoyant construction market in the Republic of Ireland”.
source