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Hill & Smith buys 80% of US firm Freeberg for $36m to expand in high-growth data centre & power markets, with deal set to boost earnings from 2026.
This article covers information on Hill & Smith PLC.
LON:HILSHill & Smith has agreed to acquire Freeberg Industrial Fabrication Corp., a US designer and manufacturer serving data centres, power generation and wider infrastructure. It’s an 80% stake upfront for $36 million (c.£27 million), with the remaining 20% tied to an earn-out through to 31 December 2031, up to $50 million (c.£37 million). Completion is targeted for the second quarter, subject to US regulatory approvals, and it will be funded from existing borrowing facilities.
This is a classic Hill & Smith move: a targeted bolt-on in a high-growth niche that sits squarely inside its US Engineered Solutions portfolio. The Board expects the deal to be earnings enhancing in 2026, which in plain English means it should lift earnings per share once consolidated.
The $36 million buys 80% of Freeberg on a debt and cash free basis. That phrase simply means the price excludes any net debt or excess cash on Freeberg’s balance sheet – you’re paying for the business itself, not its financing.
The final 20% is contingent on profitability delivered up to the end of 2031, capped at $50 million. That’s a substantial earn-out, signalling Hill & Smith’s confidence in growth but also ensuring the founder-CEO, Marc Brown, stays highly aligned – he’s remaining in post to lead the business.
For context, the initial price implies a full equity value around $45 million for 100%. On Freeberg’s unaudited adjusted EBIT of $5.3 million for the 12 months to 31 December 2025, that’s roughly 8.5x EBIT at the initial stage. If the earn-out maxes out, total consideration could reach up to $86 million, which would bake in much stronger future profitability than today.
Based in Escondido, California, Freeberg makes custom enclosures and engineered solutions used in data centres and power generation – including large-scale electro-mechanical assemblies such as genset packages. These are the sort of behind-the-scenes components that keep mission-critical facilities powered and protected.
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Demand is rising fast, particularly from data centres. Freeberg is already expanding with a new 160,000 sq ft leased facility in Arizona, designed for large-scale assembly, and set to be operational in the second half of 2026. Post completion, Hill & Smith expects up to $12 million (c.£9 million) of capital expenditure to complete this build-out through 2026 and 2027.
Strategically, this slots neatly into Hill & Smith’s US Engineered Solutions division and increases exposure to its higher-growth priority end markets. Management also sees Freeberg as a platform for further inorganic expansion in the US.
| Initial consideration (80%) | $36m (c.£27m) |
| Earn-out for remaining 20% (to 31 Dec 2031) | Up to $50m (c.£37m) |
| Freeberg revenue (12 months to 31 Dec 2025) | $31.7m |
| Adjusted EBIT (same period) | $5.3m |
| Implied EBIT margin (based on the above) | c.16.7% |
| Target operating margin once integrated | At least 18% (Group financial framework) |
| Arizona facility capex (post completion) | Up to $12m (c.£9m) in 2026–2027 |
| Funding | Existing borrowing facilities |
| Timing | Completion expected in Q2, subject to US approvals |
| Earnings impact | Expected to be earnings enhancing in 2026 |
Quick jargon check: EBIT is earnings before interest and tax – a measure of operating profit. “Earnings enhancing” usually means adding to earnings per share after integration. The Group also flags that, once integrated, Freeberg should hit operating margins at least in line with its 18% framework – implying scope for uplift from the c.16.7% shown in the latest unaudited run-rate.
This reads like a classic Hill & Smith bolt-on: disciplined on structure, strategically tight, and aimed squarely at high-growth infrastructure adjacencies. The initial multiple looks reasonable on the latest unaudited numbers, while the earn-out leans into upside if Freeberg scales as expected.
The moving parts are execution and timing – regulatory sign-off, factory ramp in Arizona, and conversion of demand into margin-rich output. Get those right and 2026 being earnings enhancing looks achievable, with further runway if Hill & Smith builds a US platform around Freeberg.
Net-net, I’d mark this as a positive, growth-accretive step with manageable risks. Worth keeping on the watchlist for progress updates through H1 and detail on the Arizona rollout in the second half of 2026.
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