Kier Group will raise £340m to pay for Mouchel

 
Caitlin Morrison
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The deal would give Kier control of 30pc of the UK’s road network (Source: Getty)
Construction group Kier will control 30 per cent of the UK’s road network if its proposed deal with international infrastructure firm Mouchel goes ahead.
The FTSE 250 company yesterday confirmed that it has entered into a conditional agreement to buy Mouchel in a deal worth £265m.
Shares in Kier Group went up by just 0.31 per cent, however chief executive Haydn Mursell said investors had reacted positively to news of the deal, which first leaked at the end of last year.
Kier will raise the funds for the transaction through a £340m rights issue. Mursell said the decision had been made to pay for the acquisition in this way because the company “made a commitment to shareholders to get to a net debt/Ebitda ratio of one by 2017”.
“So we had to make the deal much more equity-focused than not,” he added. Mursell said Kier is on track to meet the debt/Ebitda ratio target on time.
The company said the proceeds of the rights issue would also be used to repay Mouchel’s net debt.
Analysts at Liberum applauded the announcement as being a “sensible deal for Kier”. They added that the combination was strategically attractive, and said: “Mouchel is growing very fast although it will slow.”
Meanwhile, Kier also revealed yesterday that ex-chief operating officer Steve Bowcott stood down from the board on Monday, ahead of his previously announced departure date of 30 April.

BEHIND THE DEAL: HERACLIS ECONOMIDES | NUMIS SECURITIES

1 Economides qualified and worked as a chartered accountant for 12 years, and has 20 years’ corporate finance experience.
2 After stints at HSBC and Bridgewell, he joined Numis in 2008. He has been advising Kier since 2010, and has also advised JJB Sports and Capital & Regional.
3 He said yesterday that Numis had worked closely with Kier’s management to explain the rationale for the deal and as a result secured strong shareholder support.
Also advising…
Economides was joined on this deal by his Numis colleagues Christopher Wilkinson and Richard Thomas, acting as joint financial adviser, sponsor, bookrunner and broker to Kier. Also taking up these roles were JP Morgan Cazenove’s Robert Constant, Christopher Dickinson and Laurene Danon.

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