Costain and May Gurney set to merge

The UK’s Costain and May Gurney are set for an all-share merger which the two boards claim would provide a combined revenue of £1.6 billion (€1.9 billion) for a new company to be called Costain May Gurney.

The companies said the merger would bring together two businesses with complementary service offerings to create one of the UK’s leading integrated services providers to the rail, highways, water, waste, airports, hydrocarbons, power, nuclear, local government and fleet management sectors.

Costain, whose roots go back nearly 150 years, works in the UK and abroad. It claims to be one of the UK’s leading engineering solutions providers, delivering integrated consulting, project delivery and operations, and maintenance services.

May Gurney, founded in 1926, said it was a leading highways maintenance services provider in the UK for local authorities, maintaining over 35,000km of roads. Its core services include highways maintenance, street lighting and surface dressing, while it is also involved rail, environmental, utility and waterways services.

Earlier this month, in announcing a year-on-year drop in revenues but a slight rise in underlying operating profit for 2012, Costain’s non-executive chairman David Allvey said the company would continue to grow its business organically and by acquisition.

Both Mr Allvey and May Gurney non-executive chairman Baroness Margaret Ford stressed that it would be a merger rather than a takeover.

Baroness Ford said the new company would offer “an enhanced integrated offering to our clients”.

Mr Allvey said, “For our customers, we will be delivering a far broader range of essential services to the front line. That will be through consultancy, through project delivery and support services. Using our engineering programme management, we can deliver larger, complex, multi-disciplinary contracts.”

The merger, which is being recommended by both boards, is subject to a shareholder vote to be held on 8 May.

Mr Allvey, said, “The Costain strategy has been extremely clear – to become a leader in the design, delivery and maintenance of national infrastructure.”

He said the merger announcement was “a highly significant step in that process. Together with May Gurney, we will have the added experience and skills to underline our leadership status and to provide a platform for new growth and success.

“We see this coming together of two established UK companies as good news for all our stakeholders.”

“Complementary businesses”

Baroness Ford added, “May Gurney and Costain have highly complementary businesses. The markets in which we operate offer tremendous opportunities for future growth. The combination of our two companies and the strong heritage we bring will position us very well to respond to those opportunities.

“Our objective is to deliver even stronger partnerships with our clients, superior returns for our shareholders and increased opportunities for our staff.”

Mr Allvey will chair the combined group, while Baroness Ford will be deputy chair.