17th Aug 2015 07:52
LONDON (Alliance News) - Costain Group PLC Monday said it has completed the GBP36 million cash acquisition of professional consultancy service firm Rhead Group, which it said will be earnings enhancing from 2016.
"This transaction accelerates the development of Costain and further broadens our range of capabilities to meet the requirements of major blue-chip customers, providing greater ability to deliver integrated solutions across the full lifecycle of a project," said Costain Chief executive Andrew Wyllie.
Rhead Group, established in 1985 and operating with over 550 people, provides a range of solutions for the lifecycle of infrastructure, construction and asset management programmes primarily in the UK for a number of blue-chip customers including listed National Grid PLC and BAE Systems PLC.
Rhead Group's management, including Chief Executive Nigel Curry, will remain with the company.
The company generated GBP63.5 million in revenue and earnings before interest, tax, depreciation and amortisation of around GBP4.5 million in the year ended July 31.
Rhead Group will be fully integrated into Costain in the current financial year, and Costain said the acquisition is expected to be earnings enhancing from 2016. It said the funds for the purchase will come from existing cash resources and debt facilities.
The acquisition is part of Costain's focus on major customers, which are spending billions of pounds addressing national needs in energy, water and transportation in the UK.
"Those customers are consolidating their supply chains and are seeking an increasingly integrated service offering from their Tier 1 service providers through larger, longer-term collaborative contracts. Rhead Group will further enhance Costain's programme management and advisory capability across all the Group's operations as part of that integrated service offering," said Costain.
Separately, the company said it is taking this opportunity to combine all of its nuclear activities across the group into one unit which will report into the Infrastructure division.
"This action will enable a more concentrated focus on the opportunities in the Nuclear sector, driven by investment in new energy solutions and the pressing need to deal with the UK's legacy nuclear infrastructure," it said.
Costain shares were up 1.7% to 341.60 pence per share on Monday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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