Costain agrees to merge with maintenance firm May Gurney

Marion Dakers
ENGINEERING group Costain has agreed to merge with Aim-listed May Gurney, in the latest round of consolidation in the support services industry.

FTSE-listed Costain said last night that its investors will hold 53 per cent of the combined company, and it will give May Gurney investors 0.8275 new shares per existing share.

The deal gives a value of £178m to Norwich-based May Gurney, which maintains roads, collects rubbish and manages 6,000 vehicles for local authorities.

The all-share merger will create Costain May Gurney, a firm with £1.6bn in revenues and an order book of £3.9bn, the groups said in a statement last night.

Andrew Wyllie and Tony Bickestaff, the chief executive and financial director of Costain, will take the same roles in the enlarged company.

The firms will save around £10m a year through synergies.

The deal comes almost two years after Costain walked away from its £169m hostile pursuit of maintenance firm Mouchel, which was bought out of administration by its lenders and management last summer.

More than 32 per cent of May Gurney investors, including Aviva, Invesco and former boss David Sterry, have already agreed to back yesterday’s merger plan.

Costain has so far got the go-ahead from 42.7 per cent of its shareholders.

Rothschild is advising Costain on the deal, while Canaccord Genuity is advising May Gurney.