Breedon Aggregates, the largest independent aggregates group in the UK, has reached an agreement to buy certain assets from landscaping specialist Marshalls.
This follows an announcement earlier this week that they were in discussions concerning a number of quarries solely supplying aggregates, sand and gravel at different sites across the UK.
Breedon is spending an initial £17.5m in cash on the assets and could pay a total of £19m dependent on certain conditions being made.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The agreement also gives the company the option to develop sand and gravel resources at another site.
Breedon said that the quarries will provide an additional 13m tonnes of mineral reserves and resources and the potential for addition mineral prospects of 5.0m tonnes. The firm said: "The quarries represent a move into new but contiguous markets for the group."
Shares in Breedon Aggregates were up 3.19% at 23.48p in early trading on Friday.
Meanwhile Marshalls, down 0.29% at 123.14p early on, stated that the quarries sold represent non-core assets.
"Marshalls has been a niche player in the UK aggregates market for a number of years and, while the business is profitable, it remains ancillary to the core operations where our growth focus lies," said Marshalls Chief Executive Graham Holden.
"The consideration received by Marshalls from the sale of these quarrying operations will initially be used to reduce net debt and we consider it is in the best interest of shareholders."
