Brookfield Asset Management BAM-A-T has agreed to buy British-based company HomeServe for £4.08-billion, or $6.521-billion, adding a major residential-service business that fits with its home-improvement holdings.
In a release Tuesday, Brookfield said it will pay £12 per HomeServe share in cash through Hestia Bidco Ltd., an indirect subsidiary of Brookfield Infrastructure Partners. BIP manages about US$140-billion in assets across the real estate, infrastructure and renewable-power sectors.
If approved by shareholders, the unsolicited acquisition would end HomeServe’s 18-year run on the London Stock Exchange. The repair company, based in Walsall, England, offers a range of heating, cooling, electrical and plumbing services including boiler replacements and appliance repairs. It currently operates in North America, Europe and Asia.
The acquisition builds on Brookfield’s move to capitalize on a global push toward energy efficiency, with HomeServe offering services to help homeowners make their homes greener.
“We look forward to supporting HomeServe’s continued growth globally as critical residential infrastructure is upgraded in the coming years to drive decarbonization and improve energy efficiency,” Brookfield Infrastructure managing partner Sikander Rashid said in the release.
U.K.’s HomeServe in talks with Brookfield for possible offer
HomeServe recently started offering electric-vehicle charger installations, and said in its 2021 annual report that it will continue to grow its green utilities.
In a recent analyst call, Samuel Pollock, head of Brookfield’s Infrastructure Group, said the company was developing its residential infrastructure business in line with a push toward solar and other renewables.
“We think that as a trend toward decarbonization takes hold, and many new more expensive components are introduced to consumers to facilitate the reduction or the conversion from conventional fuels, that customers will need some assistance,” Mr. Pollock said in early May.
In 2020, Brookfield completed the full acquisition of TerraForm Power, a wind and solar company located predominantly in the U.S., after having bought 51 per cent of the company in 2017.
HomeServe will significantly expand the company’s presence in the home-improvement market, building on Brookfield’s $4.3-billion acquisition of Canadian home-improvement service provider Enercare in 2018.
In its 2021 annual report, HomeServe said its North American HVAC business represented the company’s largest short-term growth opportunity, with a 27-per-cent increase in adjusted operating profit over the year before.
The offering price would represent a 71-per-cent premium to HomeServe’s closing price of £7 on March 23, the last day before HomeServe announced it was beginning talks with Brookfield, according to the release. HomeServe’s stock price reached a high of £13.6 per share early in the pandemic as home-improvement spending rose, but dropped as lockdowns in Britain were lifted, falling to a five-year low of £6.3 per share in March.
HomeServe said its directors “intend to recommend unanimously” the deal to shareholders, calling the terms of the offer “fair and reasonable.”
Chief executive officer Richard Harpin said in a release that he was “delighted” by Brookfield’s commitment to provided long-term capital and global expertise.
Brookfield said it has received irrevocable undertakings – binding agreements to vote in favour of a takeover – from directors and Mr. Harpin’s wife, Kate, representing about 13 per cent of the shares outstanding.
Yet some analysts in Britain have said that the deal leaves some leeway for a competing bid. Joe Brent, head of U.K. Small & Mid Cap research at investment bank Liberum, said the wording in the release – that the directors “intend” to recommend the offer – suggests that “the door is open to another bid.”
HomeServe said it expects voting to take place during its general meeting in July, and the deal to close in the fourth quarter of this year.
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Irene Galea