Costain and May Gurney to merge in £178m deal

Grant Prior 11 years ago

Costain and May Gurney have revealed plans to merge two of the country’s biggest contractors.

The surprise move will create a new company called Costain May Gurney which will continue to be traded on the stock exchange.

Directors at both companies are recommending the deal which now needs full shareholder approval after winning support from major institutional investors.

Each May Gurney shareholder will receive 0.8275 of a new Costain share, or about 252 pence per share, a 37% premium to yesterday’s May Gurney share price.

The share deal values the Costain acquisition of May Gurney at £178m.

The merger will create a company with a turnover of £1.6bn which can bid for bigger contracts.

The new combined company will be 53% owned by former Costain shareholders with former May Gurney shareholders having a 47% holding.

The deal is expected to be rubber-stamped by early June.

The enlarged company will concentrate on the rail, highways, water, waste, airports, hydrocarbons, power, nuclear, local government and fleet management.

Costain’s board believes it can save at least £10m following the merger through shared back office functions with the loss of less than 150 jobs across both firms which would employ a total of 15,000.

The combined group will be led by current Costain CEO Andrew Wyllie as combined group CEO and current Costain Finance Director Tony Bickerstaff as the combined group Finance Director.

Costain’s David Allvey will be chairman of the combined group with May Gurney’s Baroness Maragret Ford as deputy chairman.

Allvey said: “The Costain strategy has been extremely clear: to become a leader in the design, delivery and maintenance of national infrastructure,

“The announcement today is a highly significant step in that process.

“Together with May Gurney we will have the added experience and skills to underline our leadership status and to provide a platform for new growth and success.

“We see this coming together of two established UK companies as good news for all of our stakeholders.

“Our customers are increasingly demanding a broader range of integrated services and this powerful combination will enhance our status as a Tier One engineering solutions provider.”

May Gurney issued a shock profit warning last September which saw its former chief executive Phllip Fellowes-Prynne leave the company.

Costain has been in the market for a major deal for some time after walking away from a £169m bid for Mouchel two years ago.

Costain May Gurney

  • Turnover £1.6bn a year
  • £3.9bn forward orderbook
  • Profit around £80m
  • Costain shareholders to own 53%: May Gurney shareholders 47%
  • Head office Maidenhead
  • Trowse office retained as regional hub centre
  • £10m cost savings from shared overhead
  • £14m integration cost
  • 18-month integration period

Latest news

Morgan Sindall delivers another record year of profit

Revenue tops £4bn as pre-tax profit soars 70% to £144m
57 mins ago

HS2 viaduct blunder over wonky concrete segments

Align JV now drilling out concrete joint as part of week-long remedial work
17 hours ago

City of London hots up as 9m sq ft under construction

Investors return to City as "10 Cheesgraters" of floorspace under construction
11 hours ago

Four arrested in £140m property fraud probe

Serious Fraud Office investigating collapse of property developer Signature Group
19 hours ago

McLaren gets green light for 31-storey student tower

Revamp of historic Birmingham site will provide 759 student beds and 189 apartments
55 mins ago

BT Tower to become hotel

New owner MCR Hotels to transform iconic building
1 hour ago

Plans in for first phase of £1.7bn ID Manchester

Plan to reinvent 1960s Renold Building as a new innovation hub
2 hours ago

London £3bn housing framework out to tender

SMEs allocated slots on London Construction Programme housing framework refresh
1 day ago

BAM wins first major RAAC school rebuild

Contractor seals £46m deal for St Leonards school in Durham
1 day ago

Failed strip out specialist owes £1.5m to supply chain

More than 100 subcontractors and suppliers left with unpaid bills by Type Ten Limited
1 day ago

Councils to turn screw on building owners over fire safety upgrades

Government tells councils to step up legal action against rogue building owners
1 day ago

Green light for £300m Fenland energy from waste scheme

Wisbech incinerator will generate 50MW from half a million tonnes of waste
2 days ago

Multiplex starts on 50-storey Thames tower

Developer green lights construction of latest phase of £3bn Bankside Yards scheme
2 days ago

McLaren lodges fresh Reading Broad Street Mall plan

Town centre scheme will deliver 600 homes in four towers
2 days ago

Beard bags £24.5m Bristol office revamp

Construction to start in April
1 day ago

SMEs star in £3.2bn social housing upkeep deal

Around 85% of Efficiency North's framework winners are local firms
2 days ago

Scottish NHS new building projects delayed for two years

Spending clampdown hits over a dozen planned projects
2 days ago

Balfour M25 workers hold strike ballot

Motorway maintenance crews unhappy with 3.4% pay rise offer
2 days ago

Rainsford Contracts acquires M&E specialist

Expanded contractor will have turnover of £45m
2 days ago

Statom expands with launch of Northern HQ

RC frames specialist now targeting jobs in Scotland and north of England
3 days ago

High Court dismisses Stonehenge tunnel challenge

Judge quashes legal challenge against Government consent for £1.7bn job
3 days ago

£1.5bn Teesside carbon capture scheme consented

Final investment decision expected this year for construction start
3 days ago

First viaduct steel section installed at HS2’s complex junction job

Victor Buyck Steel Construction install first 300t viaduct section
3 days ago

Sister scaffold firms file administration notices

BCM Scaffolding Services and Scaffteq West employ 100 people between them
3 days ago

McLaughlin & Harvey suffers £8.6m loss

Cost inflation and Scottish landfill tax legislation hit Antrim-based group
3 days ago

Regulator opens probe into National Highways delivery

ORR concerned about 'dip in performance' on capital projects
3 days ago

Sir Robert McAlpine chief Paul Hamer exits

Hamer replaced as CEO by former Lendlease Europe boss Neil Martin
6 days ago

Unite Students to build £250m Newcastle scheme

Work to start this summer on revamp of Castle Leazes site
3 days ago

Britcon poaches Tilbury Douglas business development chief

Don Stewart joins Britcon board as strategic director
3 days ago

Building control system on verge of collapse

Calls to delay new registration scheme
6 days ago

Contractor services