Lovell buys Connaught out of administration
Morgan Sindall's affordable housing division Lovell Partnerships has reached agreement to acquire the majority of the ongoing contracts and its related assets of the social housing division of Connaught, allowing essential maintenance services to continue without interruption.
Morgan Sindall said around 2,500 employees connected with the ongoing contracts will transfer to Lovell as part of the agreement.
Morgan Sindall added that 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 the company's existing cash resources.
The company said it had net cash of £138m at 30 June 2010 and will continue to have a strong financial position following the acquisition.
The social housing division of Connaught Partnerships has a construction depot in Widnes.
Connaught placed most of its registered companies into administration on Tuesday with only the environmental business, which has a base in Knowsley, and the compliance side kept out of administration.
Corporate recovery partners at KPMG's Manchester office are handling the Connaught administration.
Morgan Sindall said the new contracts are expected to generate approximately £200m of additional annual revenue, split broadly between response maintenance contracts and Decent Homes, planned maintenance contracts.
In an announcement on the London Stock Exchange, John Morgan, executive chairman of the Morgan Sindall Group, said: "The acquisition significantly increases the scope and scale of our planned and reactive maintenance activities and further develops our market leading position.
"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."
In the year to 31 December 2009, Lovell reported an operating profit of £14.9m on revenue of £374m.
Staffordshire-based Lovell has regional offices in Altrincham and Birkenhead.