Mouchel, the international infrastructure and business group, is set to be acquired by Kier, the UK-based construction firm, in a $408 million cash deal for the company’s entire issued share capital.
Kier is expected to fund the acquisition by raising additional equity and the transaction will require approval from its shareholders. The process is expected to take approximately five weeks. As a result, the acquisition is expected to be completed in June 2015.
“Kier and Mouchel are an excellent fit. The enlarged company will enable us to improve our offer to customers and to enhance the career opportunities of our employees,” said Grant Rumbles, Mouchel’s chief executive, who will stand down once the transaction is completed.
“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 $4.31bn. For that I thank my excellent management team and all of our staff for their hard work and determination over the last few years,” he added.
“I will remain in the business until the transaction completes. Although I will be sad to be going, I am pleased to be leaving the business in such great hands.”
The news of the deal comes in the wake of a transformation of Mouchel’s performance over the last three years, which has seen the group grow underlying operating profit to $42.6 million on turnover of $950.8 million in the financial year ending 30 September 2014.
Revenues for the three months ended 31 December 2014 have also 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 a consistently high level.
The combined company will be a sector leader in the growing UK highways management and maintenance market, servicing Highways England, Transport for London and local authorities, the Mouchel board said in the statement.
The takeover will also see the companies enhance their range of facilities management and business-process outsourcing services to local authority clients, as well as those in the water and regulated-industries market.
“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,” added Haydn Mursell, CEO of Kier.
Mursell is set to be appointed as CEO of the expanded group once the takeover is complete.