Chem-dry Goes To New Owners In £18.9m Deal

YORKSHIRE firm Chem-Dry, which specialises in repairing homes which have been damaged by fire or flooding, has been bought for £18.9m by stock market firm Homeserve

(Monday, April 18, 2005) - The deal for the Beverley-based business will trigger a £1m windfall for the Mormon Church in the UK as Chem-Dry chairman Phillip Smith will donate 10 per cent of the £10m he will receive from the sale to the organisation.
The former schools inspector, who joined the firm in 1989, a year after it was started by his brother-in-law, former Viking Radio and BBC Humberside disc jockey David Fewster, is to stay on as chairman on a three-year contract.
Mr Smith took over running the firm in 1992 when Mr Fewster moved to Switzerland to work in public relations.
Homeserve, which is based in Walsall in the West Midlands, repairs burst water pipes and blocked drains and has contracts with all the UK water companies as well as providing cover for electrical wiring and central heating.
The company, which had pre-tax profits of £51.7m last year, sees the acquisition of Chem-Dry as part of its plan to provide a one-stop shop to carry out home repairs for insurance companies.
Its chief executive is Richard Harpin, who lives near York and commutes to the head office in Walsall and other bases around the country in either his private aeroplane or helicopter.
Chem-Dry is a franchise business which was founded in the US by Robert Harris, a member of the Church of Jesus Christ of Latter-day Saints, and was launched in Britain, Australia and New Zealand by fellow Mormons.
Chem-Dry's 10-strong board includes four members of the church.
The firm is one of the UK's biggest franchised fire and flood disaster restoration businesses and carpet and upholstery cleaning networks. It currently has 640 franchises held by 230 franchisees across the country and has deals with seven leading household insurers.
The business has 210 employees ? with more than 1,000 working for the franchises ? and operates from a national control centre in Beverley and in the year to April 30, 2004, it made an operating profit of £2.6m on turnover of £37.1m.
Its net assets are £4.8m.
"We started out doing carpet, upholstery and curtain cleaning and moved into flood and fire disaster restoration in 1993," said Mr Smith.
"Now that is 75 per cent of our business working with the insurance companies and we also are the market leader in accidental damage, so if someone has paint spilled on their carpet and claims on their insurance, the insurance company will send Chem-Dry in. I think we are the last piece in their (Homeserve's) jigsaw.
"From an insurance point of view if there is a fire or flood in a home then one company will do all the repairs like electricity, plumbing and there will only be one invoice," added Mr Smith.
Chem-Dry was advised on the deal by Tim Simpson of Yorkshire-based Ingram Forrest Corporate Finance.
Mr Simpson said: "This is an ideal transaction for both sides. Working together both businesses should see the start of further growth."
The deal also sees the exit of venture capital firm 3i which invested in the firm when it was launched in 1988. Portfolio manager Ian Richards managed the sale process for 3i.
Mr Harpin, of Homeserve, said: "The acquisition of Chem-Dry is a significant enhancement of our disaster restoration activities. It will broaden the services provided by Homeserve to household insurers and places Homeserve in a unique position to offer a fully integrated service to insurance companies."

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