28th Apr 2015 06:42
LONDON (Alliance News) - Property and construction services company Kier Group PLC on Tuesday said it has struck a deal to acquire UK-based infrastructure repair and maintenance services company Mouchel in a GBP265 million deal, to be backed by a rights issue.
Kier said it will pay GBP265 million in cash to MRBL Ltd, the holding company for the Mouchel business, with the deal to be backed by a GBP340 million fully-underwritten rights issue. Kier will offer shares at 858 pence per share on the basis of five new shares for every seven existing shares held. Kier shares closed at 1,625 pence on Tuesday.
Kier said the proceeds from the rights issue will also be used to repay Mouchel's debt at the time of the acquisition and will cover the integration costs of the deal and pay the costs associated with both the rights issue and acquisition.
Kier said the deal will position it to benefit from the Road Investment Strategy in the UK, which sets out a GBP17 billion long-term investment plan on the maintenance and renewal of the road network in the UK from 2015 to 2020.
The company expects the deal to provide pre-tax cost synergies of around GBP10 million in the financial year to the end of June 2017, with integration costs expected to be around GBP17 million. Kier expects the deal to be earnings accretive for the financial year ending June 2016.
"Over the last three years, Mouchel has been transformed into a strong business with market leading positions. The combination of Kier and Mouchel, particularly in the provision of UK highways maintenance services, creates a leader in a growing marketplace. The Acquisition is consistent with and accelerates the delivery of our Vision 2020 strategy and will provide compelling value to shareholders," said Kier Chief Executive Haydn Mursell.
By Sam Unsted; [email protected]; @SamUAtAlliance
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