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How Springfield Properties pulled off its £56.4m swoop for Tulloch Homes

Innes Smith, chief executive of Springfield Properties.

Springfield Properties and Tulloch Homes are heading for a merger that could have happened long before now, it has emerged.

The two housebuilders first discussed a tie-up about a decade ago, Innes Smith, chief executive of Elgin-based Springfield revealed.

Springfield announced its proposed takeover of Inverness-headquartered Tulloch earlier this week.

Tulloch will keep its name and be run as a separate business unit, with an independent sales team and business targets, following the £56.4 million deal.

We first knocked on the door 10 years ago.”

Innes Smith, chief executive, Springfield Properties.

There are “no immediate plans to rationalise” the north company’s workforce, which numbered 136 people, on average, during the year to June 30 2021.

Recounting the chain of events that led to the two firms agreeing terms, Mr Smith said: “In any deal you need a willing seller and a willing buyer.

“We first knocked on the door 10 years ago, when the bank had a big shareholding (in Tulloch) and sold it to private equity.”

Further talks

There was a further discussion of a possible takeover about five years ago, when current Springfield chairman Sandy Adam – whose grandfather founded the Moray firm in 1956 – met Tulloch boss George Fraser for lunch.

A deal did not make sense at that time so the two men went back to running their separate businesses.

Then, about two years ago, the tie-up proposal surfaced again and shareholders were canvassed for their thoughts.

“By then it was starting to make sense but Covid knocked it all on the head for a year and a half,” Mr Smith said.

l-r Sandy Adam, Sandy Grant, Innes Smith and George Fraser as Springfield Properties strikes the deal to acquire Tulloch Homes.

The business case for the merger fell into place this year and the proposed deal was announced to the London Stock Exchange by Alternative Investment Market-listed Springfield on Wednesday.

Springfield’s combination with Tulloch will give the enlarged group a £3.5 billion land bank comprising 17,072 plots, including 56% with planning consent, across 56 active and 83 planned future sites.

This equates to about 14 years of development at current rates of activity.

No north-east plans

The tie-up will also give Springfield a bigger geographic footprint across Scotland.

Its purchase of Redrow’s Scottish operations in 2011, as well as the acquisition of Dawn Homes and Walker Group in 2018 and 2019 respectively, have scaled up business in the central belt.

Springfield has said the acquisition is in line with its strategy of expanding via acquisition and into new territories to accelerate growth.

There are still gaps in the Scottish activity map – notably in the north-east.

But Mr Smith said there were no current plans to enter the market fray in Aberdeen city and shire.

Tulloch Homes’ Druid Temple development in Inverness.

The Inverness area is an area of “high and growing” market demand, according to Springfield, whose bosses aim to make the most of an increased appetite for more spacious homes, with gardens, in rural areas.

Tulloch will be led, assuming Springfield’s shareholders approve the merger, by Sandy Grant, who has been with the business 18 years. The firm’s current CEO, Mr Fraser, 67, is retiring.

Business as usual

Mr Grant said: “The market in Inverness has been really strong.

“As more people realise they can work from home, they are reassessing their lifestyles and moving out of the big cities.”

Mr Grant said it would be business as usual at Tulloch – now in its 97th year – after the merger.

He added: “The intention is to keep running the business as it is, with the same shirt but a different sponsor.”

Springfield has said it will pay £43.4m upfront and a further £13m at a later stage to shareholders including Mr Fraser.

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