Brookfield expands home improvement property with $6.5 billion acquisition of HomeServe in the UK

Brookfield Asset Management BAM-AT has agreed to buy Britain-based HomeServe for 4.08 billion pounds, or $6.521 billion, adding a major residential services company to match its home improvement property.

In a statement on 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 approximately $140 billion in assets across the real estate, infrastructure and renewable energy sectors.

If approved by shareholders, the unsolicited acquisition would end HomeServe’s 18-year operation on the London Stock Exchange. The repair company, based in Walsall, England, offers a range of heating, cooling, electrical and plumbing services including boiler replacement and appliance repair. 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 providing services to help homeowners make their homes greener.

“We look forward to supporting HomeServe’s continued growth globally as critical residential infrastructure is modernized in the coming years to drive decarbonization and improve energy efficiency,” said Sikander Rashid, managing partner of Brookfield Infrastructure, in the statement.

HomeServe UK in talks with Brookfield for potential offer

HomeServe recently began offering electric vehicle charger installations, and said in its 2021 annual report that it will continue to grow its green facilities.

Samuel Bullock, president of Brookfield Infrastructure Group, said in a recent analyst call that the company is developing the residential infrastructure business in line with a push toward solar and other renewables.

“We believe that as the trend toward decarbonization takes hold, and many new, more expensive components introduced to consumers to facilitate the reduction or conversion from conventional fuels, customers will need some help,” Mr. Bullock said in early May.

In 2020, Brookfield completed the full acquisition of TerraForm Power, a solar and wind company predominantly located in the United States, having bought 51 percent 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 represents the company’s largest short-term growth opportunity, with a 27 percent increase in adjusted operating profit over the previous year.

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 had started talks with Brookfield, according to the release. HomeServe’s share price reached £13.6 per share early in the pandemic as spending on home improvements surged, but fell as lockdown lifted in Britain, falling to a five-year low of £6.3 per share in March.

HomeServe said its directors “intend to unanimously recommend” the deal to shareholders, describing the terms of the offer as “fair and reasonable.”

CEO Richard Harbin said in a statement that he was “delighted” by Brookfield’s commitment to providing long-term capital and global expertise.

Brookfield said it has received irrevocable pledges – binding voting agreements for the takeover – from the directors and Mr. Harpin’s wife, Kate, which represents about 13 per cent of the shares outstanding.

However, some analysts in Britain said the deal leaves some room for a rival bid. Joe Brent, head of UK Small & Mid Cap research at investment bank Liberum, said the wording in the statement – that directors “intend” to recommend the offer – indicated that “the door is open to another offer”.

HomeServe said it expects to hold the vote during its general meeting in July, and close the deal in the last quarter of this year.

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