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

The top funds to invest in
Funds

The top funds to invest in

As market volatility and recessionary fears continue, here are the most popular funds, stocks and trusts investors are putting their money into accord…
2 Feb 2023
The ten highest dividend yields in the FTSE 100
Income investing

The ten highest dividend yields in the FTSE 100

Rupert Hargreaves takes a look at the companies with the highest dividend yields in the UK’s blue-chip index
23 Jan 2023
The top ten dividend stocks in the FTSE 250
Share tips

The top ten dividend stocks in the FTSE 250

The average FTSE 250 dividend yield is around 4%, but many stocks yield much more. Rupert Hargreaves picks the best FTSE 250 stocks for income investo…
17 Jan 2023
Investing trends to watch out for in 2023: what analysts say
Investment strategy

Investing trends to watch out for in 2023: what analysts say

What are sensible strategies for high inflationary times? We ask analysts to find out.
22 Dec 2022

Most Popular

When will interest rates go up?
UK Economy

When will interest rates go up?

Interest rates are now at 4%, and they could rise further in the months ahead.
3 Feb 2023
NS&I brings back one-year fixed bonds with highest rates since 2010
Personal finance

NS&I brings back one-year fixed bonds with highest rates since 2010

NS&I’s one-year fixed bonds are back on sale after being pulled off the market in 2019 - but is the rate any good?
1 Feb 2023
Covid-19 vaccines helped these stocks take off, but what’s next for these companies?
Investments

Covid-19 vaccines helped these stocks take off, but what’s next for these companies?

Dominic Frisby explores how the top vaccine stocks are doing as booster take-up remains at a low
2 Feb 2023