East Anglia: May Gurney agrees £370m merger with Costain
- Credit: Archant
ROAD and rail maintenance specialist May Gurney has agreed a £370million merger with infrastructure contractor Costain.
The companies will have combined revenues of £1.6billion, which Costain said would help it challenge rivals including Balfour Beatty and Carillion.
Costain, which is currently working on London's Crossrail underground rail tunnel, is based in Maidenhead, which will be the group's headquarters.
The group plans to retain May Gurney's headquarters in Trowse, Norwich, as a shared services base. May Gurney has around 800 of its workforce in Norfolk.
About 150 jobs will be cut from a combined workforce of 11,000 as the group looks to save £10million a year from the all-share deal.
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Costain's directors will take the top jobs in the enlarged company, with its chief executive Andrew Wyllie continuing in that role. Costain finance director Tony Bickerstaff and chairman David Allvey will also keep their respective positions.
Mr Allvey said: 'We see this coming together of two established UK companies as good news for all our stakeholders.
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'Our customers are increasingly demanding a broader range of integrated services and this powerful combination will enhance our status as a tier one engineering solutions provider.'
Costain earned pre-tax profits of about £26m on revenues of £930m in 2012. May Gurney had revenues of about £700m in its latest financial year, earning profits of £19.3m.
Costain's existing shareholders will take 53% of the enlarged company, with May Gurney investors taking 47%. The deal requires the backing of both sets of shareholders.
Analysts at Panmure Gordon said: 'The combination of strong local service delivery along with Costain's national need focus does have attractions. Customers are demanding more integrated service capability whilst looking to reduce the number of suppliers.
'We see transport and energy services as key areas of future investment so May Gurney enhances the Costain offering.'