Polaris diversifies with East End Asphalt deal
A chance look out of the window, and a leisurely drive with his wife, have been credited by Warren Jones, chief executive officer of Polaris Holding Company Ltd, as helping to pave the way for his company's acquisition of East End Asphalt Company Limited.
The $4 million deal, consummated yesterday and announced today, comes after a year of discussions.
The addition of the 51-year-old paving operation adds to Polaris' existing portfolio which includes Stevedoring Services Limited, Equipment, Sales and Rental, and Mill Reach Holding Limited.
Polaris inherits East End's staff of ten full-time employees, and one part-time worker. Mr Jones said no redundancies are planned.
“We held a board strategy session about 18 months ago, and identified that the type of acquisition we were looking for involved labour and heavy equipment as we were looking to stick to our strengths,” Mr Jones said.
“We didn't have East End Asphalt in mind, but then about a year ago, I saw that they were paving the dock. A little birdie whispered to me, and from that our conversation started with Nick Faries [East End Group president]. We entered serious discussions from that point. While we were thinking about the acquisition, I was out for a drive with my wife one day. I was paying attention to my surroundings and I noticed that very few people in Bermuda don't have a driveway. It was a good business from our standpoint.
“No transition is smooth sailing, but there was never a time during the last year that no discussions were going on. It was a complex deal.”
In a statement issued by the company, Mr Jones said: “Strategically, we identified the value of diversification for the group and prioritised the expansion of our portfolio early on.
“East End Asphalt is the right company to take us on the next step of our corporate journey. East End enjoys market dominance and offers unique products and services to serve residential, commercial and national interests.
“At Polaris, we are positioned to leverage its synergies with our existing subsidiaries and drive growth in the business-to-business and business-to-consumer categories.”
Cheryl Hayward-Chew, board chairman of Polaris, said in a statement: “We are pleased to offer our shareholders the benefit of diversification and an enhanced portfolio. In our search for a quality operation that would be a good fit, we focused on growth potential, future profitability, and a sector aligned with our industrial leanings. East End Asphalt ticked all the boxes.”
Speaking at today's press conference, she said: “We had a goal of diversifying with a new company and new industry that matched our own strengths. I would hope and assume that our shareholders will be extremely excited about this acquisition, before which we literally had all of our eggs in one basket. We are branching out, diversifying, and that will give greater value to our shares.”
Mr Jones said the company has no plans for further expansion. “We have to work our way through this transition and learn a new business, which takes some time,” he said.
“We have to keep our eyes on both balls. We run Bermuda's only cargo dock, and we have a licence renewal coming up in February 2021, so our focus is on that as well as on East End Asphalt. Looking to the future, our plate is quite full for the time being.”
While, Ms Hayward-Chew added: “We are sensible shoppers. Taking on more than you can chew is very unwise. We take acquisitions seriously.”
Brian Gonsalves, vice-president, group operations at East End said the approach from Polaris came at a good time for the company. East End Group merged with Decisions Limited, an information communications technology company, in December 2017.
“We are selling because we are focusing on technology,” he said.
“That's who we are now, and what we want to focus on going forward. We were approached by Polaris about a year ago and the time was right to consider this. East End Asphalt needs more attention than it was getting so the deal came around at an opportune time. Polaris is a very strong company, and I know they will take East End Asphalt beyond where we are now.
“It is somewhat bittersweet to be at this position. Our staff is really at the core of our business — there are folks who have been working in the business for 30-40 years and they have a lot of professionalism and a lot of technical knowledge. They also love what they do. I am going to miss them; I became very attached to them over the years. There are very good people at East End Asphalt.”
Polaris said it takes over a company that carries out all forms of paving including city streets, runways, driveways, and small repairs. East End's services, the company said, include asphalt manufacturing, decorative paving, aggregate supply and the paving of tennis courts. It serves clients in the residential, commercial and industrial markets.