Morgan Sindall’s affordable housing division Lovell has acquired the majority of ongoing contracts and related assets of Connaught’s housing division for a cash consideration of £28 million.
Around 2,500 employees connected with the ongoing contracts will transfer to Lovell as part of the agreement,which will also allow essential maintenance services to continue without interruption.
Social housing maintenance firm Connaught Partnerships, which had a turnover in excess of £500m, was placed into administration this week after lenders failed to offer it additional funds.
Lovell said it expected the contracts to generate about £200m of revenue per year. It added that the acquisition created a national business delivering planned and reactive maintenance as well as new build social and open market affordable housing.
Lovell managing director Stewart Davenport said: “This acquisition not only saves several thousand jobs but also significantly enhances our existing social housing provision, opening up huge growth opportunities for us in the responsive and planned maintenance markets.
“Lovell is a robust, financially strong business and our new local authority and housing association customers can be confident that their projects will be transferred seamlessly and completed successfully as planned.”
Morgan Sindall Group executive chairman John Morgan said: “Our focus now will be to ensure a smooth handover of the contracts and to minimise disruption to essential maintenance services. We look forward to working with our new and existing clients and to provide them with a high level of service, as well as protecting jobs on the contracts we are acquiring.
“Through the experience built up at Lovell over many years, we are happy with the terms on which we are acquiring these contracts. The Board believes that this acquisition represents excellent value for our shareholders.”
A total cash consideration of £28m has been paid for the assets, which represents a discount to their net book value. The payment has been made from Morgan Sindall ’s existing cash resources. At 30 June 2010, Morgan Sindall had net cash of £138m.
Morgan Sindall bought Powerminster Gleeson Services in a £6.6m deal in June to extend the division’s response maintenance capability and geographic reach.