The sale was thrashed-out with administrator KPMG yesterday and Morgan Sindall expects the Connaught contracts to provide £200m of new revenue split broadly between response maintenance contracts and Decent Homes, planned maintenance work.
Morgan Sindall chief executive John Morgan, said: “This is a step change for Lovell. The acquisition significantly increases the scope and scale of our planned and reactive maintenance activities and further develops our market leading position.
“Our focus now will be to ensure a smooth handover of the contracts and to minimise disruption to essential maintenance services.
“We look forward to working with our new and existing clients and to provide them with a high level of service, as well as protecting jobs on the contracts we are acquiring.
“Through the experience built up at Lovell over many years, we are happy with the terms on which we are acquiring these contracts. The Board believes that this acquisition represents excellent value for our shareholders.”
In the year to 31 December 2009, Lovell reported an operating profit of £14.9m on revenue of £374m. On 30 June 2010, the Group announced the strategic acquisition of Powerminster Gleeson Services to extend the division’s response maintenance capability and geographic reach.
The Connaught Partnerships division employed 4,400 people when it was placed in the hands of KPMG earlier this week.
The administrators are currently working to sell the remaining contracts to rival firms or councils who may want to take them back in house.
Richard Heis, restructuring partner at KPMG and joint administrator, said: “It has been a considerable achievement to agree such a substantial transaction in such a short amount of time after our appointment, which reflects the commitment of Morgan Sindall and the efforts of Connaught Partnerships’ management and staff to secure the deal.
“We are continuing to seek to novate the remaining contracts to other providers and remain hopeful that more staff will transfer as part of this process.”
The City gave the deal the thumbs-up with Morgan Sindall’s share price rising by 10% in early trading.