Rival bids submitted for services firm May Gurney

Services firm May Gurney looks set to be sold to construction group Kier, after it launched a 221 million takeover bid for the company, around 40 million higher than a rival offer from Costain submitted last month.

An initial bid for May Gurney from engineering firm Costain, believed to be worth up to 177 million had been recommended for shareholder approval in March (see letsrecycle.com story), but Kier announced the following week that it may look to submit a rival bid (see letsrecycle.com story).

Kier had been given until Friday to table a formal offer for the company, and announced in a statement today (April 24) that it will seek to pursue the deal. May Gurneys board has agreed to the takeover, which is now subject to approval from the companys shareholders.

Shortly after Kiers announcement, Costain said: Costain is considering its position and will make a further announcement in due course.

A vote on the proposals is set to take place in June and should the shareholders agree to the Kier deal, May Gurney would be integrated into the Kier Group. May Gurneys shareholders would own 27% of the Kier Group.

Commenting on the bid from Kier, May Gurney chairman, Baroness Margaret Ford, said: This is a compelling transaction for May Gurney Shareholders. It offers a highly attractive combination of a significant premium, a cash element and, through the scale and strategic fit of the Enlarged Group, allows May Gurney Shareholders to share in the growth of one of the UKs leading integrated services and construction companies.

Waste services

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 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. The company also owns a materials recycling facility at Ettington, Warwickshire, after it acquired Pure Recycling in 2010.

Phil White, Chairman of Kier, said: Scale, performance and reputation are three essential elements of a successful services business. The combination of Kier and May Gurney has all three and is a natural fit. The combined businesses will offer more services to more clients. The Acquisition accelerates Kier’s planned growth in the sector and is significantly value enhancing.

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.