Contractor Costain is set to buy fellow contractor May Gurney in a £178M, all-share merger deal that will see the combined group named Costain May Gurney, it was announced last night.
The new combined firm will be headed up by current Costain chief executive Andrew Wyllie and finance director Tony Bickerstaff. The two will hold the same titles but for the new combined group company.
May Gurney’s existing share capital is valued at around £178M and if the deal is approved by both firms shareholders, May Gurney’s shareholders will hold 47% of the new combined group, while Costain’s shareholders are set to hold 53% of the share capital of Costain.
The respective boards expect that the merger will increase the combined firm’s ability to bid for larger, more complex and multi-disciplinary contracts and create a £1.6bn per annum turnover operation with a combined order book of around £3.9bn.
Subject to confirmation by shareholders the deal is expected to become effective on 6 June.
In an announcement, the firms said that the sectors in which both Costain and May Gurney operate were changing rapidly with the ongoing consolidation of consultancy, programme management and service delivery providers. As a result customers increasingly require their partners to have the ability to deliver solutions through a broader range of services under larger, more output-based and complex contracts.
The merger, they said, would “bring together two businesses with complementary service offerings to create one of the UK’s leading integrated services providers to the rail, highways, water, waste, airports, hydrocarbons, power, nuclear, local government and fleet management sectors”.
The two firms will continue to use their existing brands as appropriate. But the merger, they said, would provide “greater financial strength and scale, increasing the opportunity to bid for larger, more complex and multi-disciplinary contracts” and create a “larger addressable market, with a combined client base across the private sector, central and local government and regulated industries”.