Kier completes Mouchel takeover
Access to Highways England was the big attraction, says Kier boss Haydn Mursell.
Kier has completed its £265M cash purchase of infrastructure and business services organisation Mouchel.
Key attraction for Kier was access to the £21bn strategic roads market in England with the creation of Highways England via Mouchel’s maintenance deals which covered around one third of the English strategic network.
“For Kier, (the takeover) provides access to Highways England,” Mursell said. “And it creates a sector leader in the UK road management and maintenance market.”
With Kier’s contracts with local authorities, the combined group is now looking after 44,000km of roads, including 28% of the strategic network.
“The combination of Mouchel with Kier provides us with the unparalleled opportunity to work as a client’s strategic partner with Mouchel’s complementary design capability and intelligent transport systems, enhancing the range of facilities management and business processing outsourcing services we can offer to local authority clients, as well as those in the water and regulated industries markets,” Kier said on the deal’s completion.
“We expect it (the deal) to be materially earnings enhancing in the first full year of ownership and to deliver a 15% return on capital in the year to June 2017” - Haydn Mursell
“Furthermore, our expanded international presence makes us the market leader in the Australian highways business and Mouchel’s current activity and wealth of experience in the Middle East extends our capabilities in yet another exciting, growing marketplace.”
The enlarged order book now stands at £9.3bn.
According to Mursell the takeover offers opportunities in the Middle East for cross selling of the new group’s services and “the opportunity to extend the Australian highways business to other geographies”.
Mursell is anticipating a quick return on the deal. “We expect it to be materially earnings enhancing in the first full year of ownership and to deliver a 15% return on capital in the year to June 2017,” he said.
Mouchel produced underlying operating profit of £27.7M on a turnover of £617M in the year to September 2014. When the takeover was first proposed its order book stood at £2.8bn.
Mouchel chief executive Grant Rumbles now leaves the business.