Costain chairman David Allvey has insisted the firm’s bid “fully reflected” the value of May Gurney, after Costain announced it would not increase its offer, leaving Kier free to complete an acqusition.
In a video posted to the group’s website, Mr Allvey said: “We made a recommended offer for May Gurney that we believe fully reflected the value of the business following three months of due diligence.”
He added: “We had a plan and a price for May Gurney and there was no way we were prepared to compromise on that approach.”
Asked why the bid had been described as a “highly significant step in the delivery of the Costain strategy”, chief executive Andrew Wyllie said: “And it could have been, but not at any cost.
“We are very mindful of value and will not do a deal for the sake of it. Any deal we do has to be right for the business and right for our stakeholders.”
Mr Wyllie said he will continue to grow the business “both organically and by acquisition” after the firm announced it will not make a revised offer for May Gurney.
Mr Wyllie added: “We have taken a great deal out of the last few months. Five years ago Costain wouldn’t have been in a position to make such a move.”
In a statement earlier today, the company said: “Further to its announcement on 24 April 2013, the board of Costain Group plc (‘Costain’) announces that, having undertaken several months of detailed due diligence, it does not believe that it would be in the best interests of Costain shareholders for Costain to amend the terms of its proposed merger with May Gurney Integrated Services plc (‘May Gurney’) which was announced on 26 March 2013 (the ‘Proposed Merger’).
“Accordingly, Costain will not be making a revised offer for May Gurney and intends to lapse the Proposed Merger at the earliest opportunity. This is expected to be 29 May 2013.”
Kier and May Gurney announced yesterday they have reached agreement in principle on an offer of £221m for the support services firm, trumping the £178m offer of Costain last month.
It emerged today that more than a quarter of May Gurney’s shareholders, who were previously backing the Costain takeover bid, have switched in favour of Kier.
Costain added: “Accordingly, the board of Costain intends to propose the adjournment until further notice of the General Meeting of Costain shareholders that was to be held at 10am on 8 May 2013 in connection with the Proposed Merger. Costain shareholders are therefore advised not to attend that meeting in person.”
Costain’s AGM will be held as planned at 11am on 8 May.
May Gurney posted a statement to the markets this afternoon in response.
It said: “The board of May Gurney thanks the board of Costain for its highly professional and proactive engagement with May Gurney during this process.
“The board of May Gurney reaffirms its intention to seek the adjournment of the court meeting and the May Gurney general meeting relating to the approval of the Costain proposal by May Gurney shareholders convened for 10am and 10.15am, respectively, on 7 May 2013, and continues to recommend that shareholders vote in favour of the proposed acquisition by Kier Group plc, in respect of which the court meeting and May Gurney general meeting will be convened in due course.”