Contractor’s £36M acquisition intended to strengthen power sector capability and boost ability to provide an integrated service offering to major clients.

Costain has completed a £36M deal to buy professional services consultancy Rhead Group.

The deal is intended to enhance the contractor’s programme management and advisory capability and enhance its integrated service offer as part of Costain's Power sector, reporting into the Natural Resources division.

“This transaction accelerates the  development of Costain and further  broadens our range of capabilities to meet  the requirements of major blue chip customers, providing greater ability to deliver integrated solutions across the full lifecycle of a project.” Andrew Wyllie, Costain

Having come close to buying consultant Mouchel in 2011, this deal also continues the firm’s strategy of providing and integrated service to major clients over larger, longer term collaborative contracts and, it said, would enable the business to better serve UK infrastructure clients as they invest billions of pounds addressing national needs in  energy, water and transportation. 

“We are delighted to announce the acquisition of Rhead Group which has a well established reputation  for its collaborative approach, focus on innovation and service delivery excellence,” said Costain chief executive Andrew Wyllie.

“This  transaction accelerates the development of Costain and further broadens our range of capabilities to  meet the requirements of major blue chip customers, providing greater ability to deliver integrated solutions across the full lifecycle of  a project.”

Rhead Group was established in 1985 and with over 550  staff, provides a range of services across the infrastructure lifecycle, primarily in the UK for customers including National Grid, Wales & West Utilities and BAE Systems.  

In the year ended 31 July 2014, Rhead Group generated revenues of £63.5M and profits of £5.2M before exceptional administrative expenses of £0.7M.

Costain said the business would be fully integrated into the group in the current financial year and is expected to be earnings enhancing from 2016. The existing senior management team, including group chief executive Nigel Curry, will remain with the business.

Nigel Curry, Rhead  Group CEO added: “This is a significant and positive development that will enhance our offering to clients and opportunity for our team. The integration will enhance programme management and advisory capability across all the group’s operations as part of an integrated service offering.”

Costain also this week announced its decision to combine all of its nuclear activities across the group into one unit which will report into the Infrastructure division to give, it said, a more concentrated focus on the opportunities in the new build and legacy nuclear sector.