Kier trumps Costain's bid for May Gurney

Construction, services and property firm Kier Group has trumped Costain in its bid for smaller peer May Gurney, scuppering plans to merge the two latter companies together.

Construction, services and property firm Kier Group has trumped Costain in its bid for smaller peer May Gurney, scuppering plans to merge the two latter companies together.

Kier said on Wednesday that it had reached an agreement on the terms of a recommended offer for May Gurney which values the company at £221m.

The acquisition is thought to "significantly enhance" Kier's existing Services division, "bringing together two businesses with highly complementary skill sets, service offerings, geographic exposure and customer bases".

Through the deal, shareholders would receive 0.2095 new Kier shares and 50p in cash for each May Gurney share, which represents a value of 315p per share.

May Gurney's Chairman Baroness Margaret Ford said that this is a "compelling transaction" for shareholders. She said: "It offers a highly attractive combination of a significant premium, a cash element and, through the scale and strategic fit of the enlarged group, allows May Gurney shareholders to share in the growth of one of the UK's leading integrated services and construction companies."

This is a 71% premium to the closing price of 184p on March 25th, the day before Costain had announced its proposed merger, and a 35% premium to the current value of the Costain proposal of 234p per share.

May Gurney shareholders, who will own around 27% of the enlarged group, will have the option to vary the proportions of cash and new Kier shares they receive through a 'Mix and Match Facility'.

"'Scale, performance and reputation are three essential elements of a successful services business. The combination of Kier and May Gurney has all three and is a natural fit," said Kier Chairman Phil White.

"The combined businesses will offer more services to more clients. The acquisition accelerates Kier's planned growth in the sector and is significantly value enhancing," he said

Kier remains on trackIn a separate statement on Wednesday, Kier said that it remains on course to meet expectations for the full year ending June 30th after a decent third quarter.

"The group's order books in Construction and Services remain robust, trading performance and cash position are in line with expectations and the group is experiencing a good level of bidding activity across the group."

Meanwhile, the firm said that it has made "good progress" with its business review plans which involve the closure or disposal of non-core activity and restructuring of its network of offices. "It promises to deliver significant reductions in costs, greater organisational efficiency and establish a strong platform for future growth," Kier said.

Recommended

Imperial Brands has an 8.3% yield – but what’s the catch?
Share tips

Imperial Brands has an 8.3% yield – but what’s the catch?

Tobacco company Imperial Brands boasts an impressive dividend yield, and the shares look cheap. But investors should beware, says Rupert Hargreaves. H…
20 May 2022
Investing in drugmakers: uncommon profits from curing rare diseases
Share tips

Investing in drugmakers: uncommon profits from curing rare diseases

Treatments for medical conditions with only a small number of sufferers can still be very attractive for pharmaceutical companies and investors becaus…
20 May 2022
Share tips of the week – 20 May
Share tips

Share tips of the week – 20 May

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
20 May 2022
Delivering profits: should you buy Royal Mail shares?
Share tips

Delivering profits: should you buy Royal Mail shares?

The volume of parcels delivered by Royal Mail soared during the pandemic, and so did its profits. But it has been coming under pressure lately. So, as…
19 May 2022

Most Popular

The ten highest dividend yields in the FTSE 100
Income investing

The ten highest dividend yields in the FTSE 100

Rupert Hargreaves looks at the FTSE 100’s top yielding stocks for income investors to consider.
18 May 2022
Aviva: a share for income investors to tuck away
Share tips

Aviva: a share for income investors to tuck away

Insurance giant Aviva is one of the highest yielding stocks in the FTSE 100 – and it’s cheap, too, making it a tempting target for income investors. R…
18 May 2022
Despite the crypto crash, bitcoin still has a bright future
Bitcoin & crypto

Despite the crypto crash, bitcoin still has a bright future

Cryptocurrencies have crashed hard, with bitcoin down by more than 50% from its peak. But, says Dominic Frisby, bitcoin still has a future – it is the…
19 May 2022