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".
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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.
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