Contractor Kier has today launched a rival offer for May Gurney worth £221M just weeks after Costain proposed a £178M all share offer.
Kier’s counterbid is worth an extra 35% more than Costain’s all share offer. The bid values the firm at 315p per share - a 71 per cent increase on its share price on the final day trading before Costain’s original bid.
Under the terms of the bid the enlarged company will be led by current Kier chief executive officer Paul Sheffield and be headquartered at the firm’s current base of Tempsford Hall in Bedfordshire. May Gurney’s current headquarters in Trowse in Norfok will be retained as a shared services centre for the new firm.
If the new bid goes through the new firm will be named Kier and May Gurney shares will be cancelled. The acquisition includes a mix and match facility whereby May Gurney shareholders will be able to mix the amount of shares and cash they receive for the new firm.
“Kier Directors believe that the Acquisition will significantly enhance Kier’s existing Services division, bringing together two businesses with highly complementary skill sets, service offerings, geographic exposure and customer base,” said Kier in a board statement.
“The Enlarged Services Division would be a leading provider of services to the Local Authority and regulated utility sectors, able to build on the existing businesses’ individual strengths. Kier recognises the strength of the May Gurney brand and intends to retain it at an operating level.”
Kier said it expects to save £20M from the merger through consolidating corporate and shared services as well as material procurement savings. About £5M is expected to be saved by the end of June 2014 and a further £15M by the end of June 15 2014 the full £20 million in the financial year ending 30 June 2016.
“‘Scale, performance and reputation are three essential elements of a successful services business,” said Kier chairman Paul White. “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.”
May Gurney has until 7 May to formally respond to the Costain offer and 28 days to respond to Kier’s counterbid.
“This is a compelling transaction for May Gurney Shareholders,” said May Gurney chairman Margaret Ford. “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.”