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Galliford Try buys Miller Construction

Galliford Try has told the City it has struck a deal to buy Miller Construction for £16.57m.

Galliford Try said the acquisition would be earnings enhancing in the year to 30 June 2015 including one-off restructuring costs.

Turnover for Miller’s construction business for the year to December 2013 was up 57.6 per cent to £408.7m, compared with £259.4m in 2012.

However, it made an operating loss of £4.6m due to write-downs on “a limited number of contracts that had been procured competitively on the basis of price”.

Galliford Try said it expected the Miller business to return to profitability in the current year having restructured or exited a number of loss-making contracts.

Yesterday, Galliford Try posted a financial update in which it said it expected to make record-breaking profits at the “upper end” of analysts’ current range of £92.8m-£95.2m.

Click here for Construction News’ interview with Galliford Try’s construction chief executive Ken Gillespie on the Miller Construction acquisition.

Comment

Galliford Try chief executive Greg Fitzgerald said: “We are delighted to announce the acquisition of Miller Construction, achieved at a very good price and with no net cash consideration.

“The acquisition brings together two construction businesses with a strong strategic fit and accelerates our strategy of growth into an improving marketplace.”

Galliford Try said the move was evidence of its “particular focus on developing our positions on regional and national frameworks”.

It leaves the business with construction turnover of around £1.25bn, and increases the 2018 target to circa £1.5bn. The acquired order book of £1.4bn doubles the group’s order book to £2.8bn.

It said: “The directors believe that the acquisition price of £16.57m represents a very attractive valuation for Galliford Try.”

Miller Construction had gross assets of £232m at 31 December 2013. The group has agreed to transfer Miller Construction with a nil net assets balance, including a cash balance of £23m.

Miller Construction has PPP investments of around £14m. Galliford Try has identified £7m in annual cost synergies, the majority of which it would expect to see in the financial year ending 30 June 2015.

It expects to pay £4m in one-off restructuring costs, mainly in the same financial year.

Galliford Try was advised on the Acquisition by Gleacher Shacklock.

More to follow.

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