COSTAIN’S proposed merger with road maintenance group May Gurney officially ended yesterday, following last month’s decision to bow out of the bidding war with construction firm Kier.
The firm had made an offer of 283p per share for May Gurney in late March but this was trumped by Kier’s rival bid of 315p per share just weeks later, an increase of around 35 per cent.
Brokers Liberum Capital and Whitman Howard called Kier’s offer a probable “knock-out bid” at the time and said it seemed unlikely that Costain would make a further offer.
Kier offered synergies of £20m between the two firms over the next two years, bettering Costain’s estimated £10m savings.
“This is a transformational deal for us,” Paul Sheffield, chief executive at Kier, told City A.M. last month. “We have been wanting to double the size of our services business and this acquisition would do that.”
May Gurney and Kier’s annual meetings are scheduled for June and it is understood that the merger is still thought to be on track for shareholder approval in July.
May Gurney’s stock closed 1.5 per cent higher at 312.53p yesterday, below Kier’s offer of 315p per share. Kier Group declined to comment.