Mouchel has reached an agreement for the sale of its entire issued share capital to Kier, the integrated property, residential, construction and services group.
Kier will pay £265 million (US$401 million), in cash, for the business.
The transaction follows a transformation in Mouchel's performance during the last three years which has seen the group grow underlying operating profit to £27.7 million on turnover of £617 million in the financial year ended 30 September 2014. Revenues for the three months ended 31 December 2014 have increased by 38 % compared to the same period in the previous year. Since the end of the period, Mouchel has continued to experience similar growth and has maintained margins at historic levels.
The combined company will increase its weight in the growing UK highways management and maintenance market, servicing Highways England, Transport for London and local authorities. The transaction will also enhance the range of Facilities Management (FM) and Business Process Outsourcing (BPO) services that the enlarged group can offer to local authority clients, as well as those in the Water and Regulated industries market.
Kier is funding the acquisition through raising additional equity and the transaction will require the approval of its shareholders. This process is expected to take approximately five weeks. As a result, the acquisition is expected to complete in June.
On completion of the transaction, Mouchel Chief Executive Grant Rumbles will stand down. Haydn Mursell, the CEO of Kier, will be CEO of the expanded group.
Grant Rumbles, Mouchel's Chief Executive, stated:
"The enlarged company will enable us to improve our offer to customers and to enhance the career opportunities of our employees. This deal is testimony to the successful turnaround of Mouchel following its 2012 restructuring. Refocusing the business on its core strengths and targeting profitable growth has brought us to a position where our order book is now more than £2.8bn. For that I thank my excellent management team and all of our staff for their hard work and determination over the last few years."
Haydn Mursell, CEO of Kier commented:
"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."