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Costain to merge with May Gurney

UK construction company Costain is to buy infrastructure and maintenance firm May Gurney for about 177m pounds in an all share deal.

UK construction company Costain is to buy infrastructure and maintenance firm May Gurney for about 177m pounds in an all share deal.

The merger will create a combined infrastructure group with a market capitalisation of £378m and sales of £1.6bn a year, the companies announced Wednesday.

Each May Gurney shareholder will receive 0.8275 of a new Costain share, or about 252p per share.

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Andrew Wylie, Chief Executive of Costain, would lead the combined company which would create a challenge to rivals such as Balfour Beatty and Carillion.

The deal is subject to shareholder approval. Costain shareholders would own 53% of the group while May Gurney shareholders would hold 47 %.

May Gurney, which helps maintain Britain's highways, rail and utilities services, last September issued a profit warning and lost its Chief Executive after admitting that waste and collection contracts in Bristol and Chester were so poorly written that it was losing money.

Costain, on the other hand, in early March reported a 16% rise in full-year adjusted profit.

Rothschild was the financial adviser to Costain, which builds and maintains highways, rail stations and airports.

Canaccord Genuity advised May Gurney.

RD

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