Chief executive of Mouchel, Grant Rumbles, has revealed his firm will be seeking to expand its presence in the local authority highways market following Kier agreeing to buy the company in a £265m cash deal.
Kier plans to finance the buy-out using a fully underwritten £340m rights issue, which will help cover Mouchel's debt and the integration costs as well. The transaction is due to be completed in June, pending shareholder approval.
The deal is set to create a highways infrastructure superpower with the two businesses combined boasting a £3.6bn turnover and servicing about 44,000km of total UK road, and 28% of the country’s strategic road network.
Speaking exclusively to Surveyor, Mr Rumbles said the market was still very competitive but that the two firms were a ‘perfect fit for each other’ as Kier would help Mouchel move into the local market while Mouchel would bring its expertise, including smart motorways experience, from the strategic road network.
‘We will be hoping to expand our work with local government. We see ourselves as asset management experts so that’s one thing we can offer to councils. Price will always be a factor in bidding for contracts, but it’s encouraging to see the highways sector as a whole moving towards more of an emphasis on quality. That’s what we need to see.’
Mr Rumbles, who took over in October 2011, said the deal was testimony to the remarkable turnaround Mouchel had made since falling into a drastic position prior to him taking over and a 2012 restructuring.
At one point the firm took on a £180m debt refinancing deal with banks to help resuscitate its fortunes as it share price dropped to roughly 10p.
Mr Rumbles maintained that the quality of the company’s work and its personnel had helped steer it through the troubled times: ‘I would say our top 70 people could rival those in any firm in the world. Kier respect our brand and our position in markets all over the world.’
Haydn Mursell, CEO of Kier plc added: ‘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.’