Heating and Ventilating

Fenhams, the family-run heating manufacturer based in Newcastle, is to be bought by the industrial engineering group Southern Bear Plc.
Fenhams installs, services and maintains central heating systems and carries out building repairs and maintenance to the private housing and social housing market. Its customers include EAGA, the leading deliverer of the UK governments' fuel poverty programmes including Warm Front.

Southern Bear will initially pay £3 million in cash and issue £750,000 worth of shares in payment. An additional amount of £3.75m (payable in three installments) will be paid, subject to Fenhams hitting future operating targets.

Installing more than 9,000 domestic heating systems last year in the UK, Fenhams' 190-strong workforce is made up of gas service engineers, electrical engineers and a large administration support team.

Founded as 'Fenhams Gas Heating and Plumbing Services' in 1981, by father and son team James and Paul Richardson, today the business is lead by Paul Richardson and Janet Domin.

The majority of Fenhams' clients are located in Tyne &Wear, Cumbria and Yorkshire and the Midlands. The firm has three divisions: Heating and Installation; Service and maintenance and Decent Homes. Fenhams reported an £8 million turnover for the eight month period ending November 30, 2007.

The social housing maintenance repair market is currently worth £12.5 billion per year, with 5.35 million housing units defined as social housing stock in the UK. The Housing corporation estimates to meet current demand for social housing 50,000 new social rented homes will be needed a year.

Southern Bear is a holding company that acquires UK and European firms operating in the support services, engineering and industrial sectors. It describes itself as a keen buyer of firms with a strong second-tier management where the owners are seeking an exit. In September 2007, Southern Bear bought UK firm BGC, the heating, installation and gas boiler maintenance firm operating in the social housing sector.

A spokesman for Southern Bear said 'The acquisition of Fenhams represents the second acquisition by the company in the support services sector. This sector is highly fragmented and ripe for consolidation.

He added 'The social housing repair and maintenance market is growing and supported by government initiatives and grants it should therefore receive some protection from economic or consumer downturns. The business of Fenhams is complementary to that of BGC, providing opportunities for client cross-selling, operating synergies and adoption of best practices'.

The firm's acquisition is treated as a 'reverse takeover' (due to the size of Fenhams in relation to the purchaser ) and the acquisition is conditional on the approval of existing shareholders who will discuss the move at the AGM on August 28.