Construction group Kier has announced that they have reached agreement on the terms of a recommended offer for engineer May Gurney of 0.2095 Kier shares and 50 pence for each May Gurney share.
The consideration represents a value of 315 pence per May Gurney Share, or a total of £221m as of 23 April. Kier calculates that this is a premium of 71 per cent on the close price of May Gurney shares on 25 March (when Costain proposed a merger with May Gurney) and exceeds the value of Costain's proposal by 35 per cent on 23 April.
Phil White, Chairman of Kier, commented:
Scale, performance and reputation are three essential elements of a successful services business. The combination of Kier and May Gurney has all three and is a natural fit. The combined businesses will offer more services to more clients. The Acquisition accelerates Kier's planned growth in the sector and is significantly value enhancing.
Baroness Margaret Ford, Chairman of May Gurney, commented:
This is a compelling transaction for May Gurney Shareholders. It offers a highly attractive combination of a significant premium, a cash element and, through the scale and strategic fit of the Enlarged Group, allows May Gurney Shareholders to share in the growth of one of the UK's leading integrated services and construction companies.
Shares in May Gurney soared in March when it found itself at the centre of a bidding war:
Kier said that a tie-up with May Gurney – which maintains highways, railways and utility services – would “create significant value for shareholders, establishing a market-leading and well-balanced business”.
The enlarged group would offer Kier an opportunity to expand its footprint in the regulated sector, the FTSE 250 company said yesterday, as well as offering an “unrivalled range of services to local authorities”.
Kier has made previous attempts to discuss a merger with May Gurney, and in light of the Costain move yesterday said it was “considering its options” for the “good quality support services business”.
Kier released an interim management statement today for the period from 31 December to date (release). The firm said that it remains on course to meet expectations for the current financial year as order books in construction and services remain robust.