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

RSK secures £500m for fresh acquisitions spree

Acquisitive group aims buy another 200 businesses by 2030
6 hours ago

Employee-owned Neilcott staff share £250,000 payout

Employee-owned building contractor sales jump 38% to £139m
20 hours ago

Geoffrey Osborne supply chain hit for £26m

More than 500 suppliers and subcontractors left holding unpaid bills
4 days ago

Race for £800m South West Wales framework

Up to 16 firms face fight to renew spots on regional contractors framework
1 day ago

SME contractors agree 4% pay rise for site workers

Workers will also get an extra day of holiday
4 days ago

South East expansion paying off for Meldrum Group

Turnover up to £55m as North East based contractor expands national coverage
19 hours ago

Wates boosts paternity leave to 12 weeks

Latest leave benefits apply from first day of working for contractor
20 hours ago

Taylor Wimpey chief honoured with CBE

Jennie Daly recognised in King's Birthday honours
3 days ago

Labour to mothball £320m A27 job to fix potholes

Manifesto confirms Arundel Bypass canned as "poor value for money"
4 days ago

Lendlease’s £1.9bn Smithfield Birmingham scheme approved

Initial work to start later this year despite questions over Lendlease's degree of involvement
4 days ago

Crest Nicholson rejects £650m Bellway bid

Second Bellway approach rebuffed
4 days ago

Hill submits £800m East London estate rebuild plan

Over 1,900 homes to be built in five phase at Teviot Estate in Poplar
5 days ago

Plan approved for 8,500-seat Edinburgh indoor arena

Construction expected to start next year once a contractor is appointed
4 days ago

Statom starts on £25m Bristol Airport precast car park

Major work package on transport upgrade being overseen by Griffiths Farrans JV
5 days ago

Build problems plunge Crest Nicholson to a £31m loss

House builder unearths more defects on completed sites
5 days ago

Rebooted Amey lifts contract win rate to 1 in 3 bids

Amey chief says firm exceeded expectations in first year under new owners
5 days ago

BAM Nuttall fined £2.3m after worker drowned

Court hears how series of safety failures led to tragedy
5 days ago

OCU buys Scottish civils contractor RJ McLeod

Deal takes multi-utility infrastructure specialist revenue to over £800m
6 days ago

£220m plan to restore secret wartime tunnels approved

Tunnels under High Holborn to become cultural exhibition space
6 days ago

Galliford Try wins £69m Scottish school job

Deal sealed on Paisley Grammar School project in Renfrewshire
5 days ago

Balfour wins design for £690m Skye transmission job

Main work contract for 137km power line to be awarded later this year
6 days ago

Student and resi developer Fortis goes under

Cheshire based developer follows construction arm into liquidation
6 days ago

Construction output falls for third month running

Heavy rain and strong winds blamed for sharp fall in activity in April
6 days ago

Plan in for Leeds 27-storey block of flats

390 flats planned at former Morgan Sindall office site
6 days ago

Firms readied for £1.5bn Parliament estate upkeep deal

Invitation to tender due to go out next month
6 days ago

Amey switches kit supplier

Deal with HSS was worth £24.5m a year to rental specialist
6 days ago

Track workers scatter to avoid runaway rail trolley

Track trolley careers 1km towards work site
6 days ago

Direct delivery model pays off as Murphy profit soars to £67m

Group operating margin jumps from 3% to 5% in record year
7 days ago

Ex-Galliard boss to lead Battersea next building phase

Don O’Sullivan joins as plans advance to start phase 3C of power station redevelopment
7 days ago

£100m Digbeth 33-storey flats job out to bid

483 flats will be delivered for Clarion housing association
7 days ago

Contractor services