Costain withdraws May Gurney bid

Engineering firm Costain has withdrawn its 177 million bid to merge with services company May Gurney, with Kier left in the running to take over the Middlesex-based company.

Costains bid had been recommended for shareholder approval by May Gurneys board in March, but Bedfordshire-based Kier submitted a rival bid worth around 221 million on Wednesday (April 24) (see letsrecycle.com story).

And, after May Gurneys board agreed to the terms of the proposed Kier takeover, Costain has opted not to pursue the deal.

In a statement published yesterday, the company said: Further to its announcement on April 24, the Board of Costain Group PLC (“Costain”) announces that, having undertaken several months of detailed due diligence, it does not believe that it would be in the best interests of Costain shareholders for Costain to amend the terms of its proposed merger with May Gurney Integrated Services plc (“May Gurney”) which was announced on March 26.

Accordingly, Costain will not be making a revised offer for May Gurney and intends to lapse the Proposed Merger at the earliest opportunity.”

Approval

The proposals have now been submitted for approval from Kier and May Gurney shareholders, with final agreement expected to be reached in June. Should the deal be approved May Gurneys shareholders would own 27% of the Kier Group.

The takeover would also see Kiers managing director of environmental services, Nichola Peake, reunited with her former employer. Ms Peak left May Gurneys environmental services division in December 2011 after four years at the company, taking up her position at Kier in February 2012 (see letsrecycle.com story).

Both companies have activities in the waste sector, with May Gurney operating several waste and recycling collection contracts with local authorities including across the UK, as well as offering services such as street cleansing and highway and rail network maintenance.

Kier has a number of waste and recycling contracts, and in 2012 bought a 50% stake in AD specialist BiogenGreenfinch, investing around 24.4 million in the company (see letsrecycle.com story). The company also owns a materials recycling facility at Ettington, Warwickshire, after it acquired Pure Recycling in 2010.

In September 2012, May Gurney issued a profit warning citing serious operational issues with two of its kerbside sort recycling collection contracts. The difficulties also resulted in chief executive Philip Fellowes-Prynne stepping down (see letsrecycle.com story).

The deal would represent further consolidation in the services sector, coming just months after services firm Enterprise was purchased in a 385 million deal by Ferrovial, the Spanish parent company of waste management firm AmeyCespa (see letsrecycle.com story).