Lumber Depot has secured a 35 per cent stake in local hardware company Atlantic Hardware & Plumbing Company Limited (Atlantic).

In a notice posted to the Jamaica Stock Exchange Tuesday, the company said it purchased the stake for $210 million utilising balance sheet funds. This, as Construct Group Limited, a private investment company, continues to remain majority shareholder in Atlantic, controlling about 50 per cent of the company while another third party company controls the remaining 15 per cent.

Atlantic, a 30-year-old company, is a local distributor of building materials, plumbing, electrical, tools, and supplies to hardware stores, contractors and developers across Jamaica. The Ashenheim Road based business previuosly owned by Donald Fung, will now be managed by Deanall Barnes, a seasoned construction industry expert, attorney-at-law and member of the Construct Group.

Confirming the acquisition as one of those that were being seriously eyed when asked by the Jamaica Observer about its plans for growth during the last annual general meeting held in October last year, managing director of Lumber Depot Major Noel Dawes said it comes at an appropriate time, aligning well with the operations of his company.

“The securing of a stake in this company aligns with our strategic goals, in terms of building out our current brand. It is a very strong company which has been around for a long time which also boasts a very good track record. There is, however, a lot more which can be gained and developed from its operations in the wholesale trade and we believe we can give it an avenue to do so. It will be an independent company, led by a very strong manager, so for us, we see it as a very good fit,” Dawes said in a telephone interview with the
Business Observer on Tuesday.

For Barnes, Atlantic’s new managing director, the company will continue on its path in serving hardware stores, contractors and developers throughout the country.

“As already established there will be no seismic change in our strategy and we continue to remain the supplier of choice in the construction industry as we look forward to strengthening our position in the local landscape. Our immediate intention is to grow the company consistent with the directives of the new owners, pursuing organic growth while maintaining a ‘relationship of convenience’ with domestic suppliers and manufacturers for the products we trade,” he added.

Pursuant to the transaction dated May 1, 2024, Dawes is to represent the interest of Lumber Depot on Atlantic’s board, along with two other directors, at its future meetings.

Lumber Depot, which has long declared its intent to go after accretive, value-adding companies, said this focus remains unchanged as it looks to further grow shareholder value for its more than two-decade-old business.

At the end of the nine-month period ended January 31, 2024, Lumber Depot generated net profits of $126.1 million on revenues of $1.2 billion — $376.8 million of which it secured in revenues and $39.4 million in profit during the three months.

Located in Papine, St Andrew, Lumber Depot has its core business in the sale and distribution of a wide range of more than 3,000 hardware and building-construction supplies. Following its split from the Blue Power Group in 2019, the company has been working to carve out its presence and to push its own weight in the local market.

Dawes, in commenting on the prospects for further acquisitions, said there is always something in the pipeline but it added that it boils down to how far it is developed before any information can be shared.

“What we want to do is to take our time to be strategic in how we develop and grow one at a time. As a board we will also continue to meet to discuss and examine our strategic outlook to see how best we can move in further developing both companies. This perhaps could also entail looking at the prospects for a possible future listing of the company. At the moment, everything remains at a developmental stage and we continue to assess them one at a time and in a very strategic way to ensure that we get maximum value for all our investors going forward,” he said.