Mears has announced it has bought Morrison Facilities Services in a £24 million deal.
Morrison plc, a subsidiary of Anglian Water, has sold the division to Mears which said it would be an earnings enhancing acquisition by 2013 and would strengthen its ability to secure large tenders.
Mears expects to incur £8m in one-off restructuring costs, half of which are likely to be in the current financial year and the other half during 2013.
The acquisition is being financed through £16m in cash, to be funded from Mears’ existing banking facilities, and the balance of £8m through the issue of 2,833,489 new Mears shares, which have been issued to AWG at a price of 282.3 pence per share.
In a trading update this morning, Mears said it has secured new contracts worth £107m since 1 July 2012, taking its orders for the current year to £142m.
Mears’ new contract win rate in the current year is 25 per cent and it currently has more than £1.1 billion of new contracts at pre-qualification or tender stage.
Mears chief executive David Miles said: “I am delighted to have completed the acquisition of Morrison at a price which fairly reflects its current profitability.
“Given our strong operational platform and differentiated service delivery ethos, together with our ability to turn around businesses, I am confident that we will deliver significant improvements to Morrison’s contracts, customers, tenants and employees.”
In a statement to the City, Mears said that clients are increasingly actively forming broader relationships with fewer, larger operators and the combination of Mears and Morrison would strengthen Mears’ depth and breadth of relationships with both smaller and larger clients.
Key financial information
For the year ended 31 March 2012, Morrison reported turnover of £290.9m and an operating loss, before exceptional items, of £7.6m.
Gross assets at 31 March 2012 were £70.5m.
During the 2012 financial year and subsequently, Morrison has restructured or exited a number of mainly loss making contracts, reducing the pro forma annualised loss to approximately £5.3m.
Mears has identified a total of £8m of synergies, the majority of which it would expect to achieve during the 2013 financial year and the balance during 2014.
Mears expects it will be able to achieve additional trading enhancements of approximately £1m in both 2013 and 2014.