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28 March 2013 | Anna Reynolds
Construction company Costain has agreed a merger with infrastructure and services group May Gurney, and predicts annual savings of £10 million as a result.
The merger will bring together the two businesses to provide construction, engineering and maintenance services to the rail, highways, water, waste, airports, fleet management and local government sectors.
The combined group, to be called Costain May Gurney, would have £1.6 billion in revenue and a £3.9 billion order book. Costain shareholders would control 53 per cent of the group, with May Gurney holding the remaining 47 per cent.
In a statement, the two companies said the merger would mean increased opportunities to bid for larger, more complex contracts. Costain said the firms should be able to save around £10 million a year through synergies, such as reduced duplication of similar operations.
Further, the group will continue to use May Gurney’s regional suppliers in East Anglia, in addition to retaining the company’s head office in Norfolk as a shared services centre and group’s hub in the area.
Baroness Margaret Ford, non-executive chairman of May Gurney, said in a statement: “May Gurney and Costain have highly complementary businesses. The markets in which we operate offer tremendous opportunities for future growth.”
David Allvey, non-executive chairman of Costain, said: “Our customers are increasingly demanding a broader range of integrated services and this powerful combination will enhance our status as a tier one engineering solutions provider.”
The companies expect the merger to be finalised in June 2013, but is dependent on shareholder approval. So far 42.7 per cent of Costain’s shareholders are in favour, while 32 per cent of May Gurney’s investors have agreed to back the plan.