Building materials group Grafton is set to increase its share of the UK market following approval by shareholders of a plan to acquire Jacksons Building Centres, the UK's largest regional builders suppliers.

At an extraordinary general meeting at the company's headquarters in Dublin yesterday, shareholders voted to accept the board's proposal to acquire the UK group, which will allow Grafton increase its stake from 6 per cent to 8 per cent of the UK market.

Grafton chairman Mr Michael Chadwick predicted that the new business would push the group's turnover in the UK over the €1 billion mark and would reinforce Grafton's position as the fourth-largest builders materials merchant there. The acquisition will mean that the UK business will account for more than 75 per cent of the group's sales in 2003.

When plans for the takeover were originally announced, the company's share price dropped by 40 cent to €2.80 amid concerns that Grafton was paying too much for Jacksons. Some analysts believed the price of €144.2 million, which equates to about 15 times earnings, was too high. At midday yesterday, shares were trading at €3.05 on the Dublin stock exchange.

However, Mr Chadwick said: "Our view is that we are buying a good business for which we are paying a fair price."

This was a view supported by several UK analysts, including Merrill Lynch, which rated Grafton stock as a "buy".

The acquisition will be partly funded by a €70.6 million rights issue, with an additional €25.6 million covered by loan notes and the remainder by bank debt.

Jacksons is the UK's seventh-largest builders merchants in terms of turnover and has 18 branches in the east midlands.

Jacksons reported turnover of £120 million sterling (€175 million) and profit before tax of £4.7 million for the year ended December 31st, 2001. Its branch network will continue to trade under the Jacksons name.

The takeover will bring Grafton's UK workforce to more than 4,500 and expand its store network to 245.