Last week letsrecycle.com reported that May Gurney had reached agreement to merge with engineering firm Costain, subject to shareholder approval, in a deal worth around 177 million (see letsrecycle.com story).
But, since announcing the proposed move to shareholders, Bedfordshire based construction and services group Kier has also announced an interest in the company.
In a statement published last week (March 27), Kier stated that it holds May Gurney in high regard and that its range of services compliments Kiers existing offering, adding Kier believes that a combination of Kier and May Gurney would create significant value for shareholders, establishing a market-leading and well-balanced business.
However, despite the interest, a formal offer for May Gurney has yet to be made by Kier. And, unless a formal offer is received, May Gurneys shareholders may still decide to approve the Costain merger.
Mike Bell, of brokerage firm Peel Hunt LLP, which advises May Gurney, said: All that Kier has disclosed publicly is the content of that announcement, there is no guarantee that a formal proposal would be forthcoming.
He added that a final decision over whether a merger between Costain and May Gurney is likely to take several weeks, as it requires approval from both companies shareholders.
“Kier believes that a combination of Kier and May Gurney would create significant value for shareholders”
Kier
He said: May Gurneys board has recommended to shareholders to agree to a merger but the process for shareholder agreement can take several weeks. Both boards will require a 75% majority to agree to the deal.
Benefit
Speaking to letsrecycle.com today, a spokeswoman for Kier said that the company was assessing the likely benefit of the move before deciding if an offer should be made.
She said: We think that potentially May Gurney could be a good fit alongside Kier, but we are currently considering the options. We have been granted access to the companys financial data and we are carrying out due diligence to see if there is any value in a bid.
The three companies all have activities in the waste sector, with Norfolk-based May Gurney holding 20 waste collection contracts across the UK, while Costain has the construction contract for Viridor Laings waste disposal contract with the Greater Manchester Waste Disposal Authority (GMWDA).
Kier
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 (see letsrecycle.com story).
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).
Register for free to comment