The Boards of Costain Group PLC (COST.L) and May Gurney Integrated Services plc (MAYG.L) announced that they have reached agreement on the terms of a recommended all-share merger of Costain and May Gurney. Costain will acquire the entire issued and to be issued ordinary share capital of May Gurney, and upon the merger becoming effective, Costain, will be renamed, Costain May Gurney PLC. The Combined Group will be led by the current Costain CEO, Andrew Wyllie, as the Combined Group CEO and the current Costain Finance Director, Tony Bickerstaff, as the Combined Group Finance Director. The merger is conditional on, amongst other things, the approval of Costain shareholders and May Gurney shareholders.
The merger is to be implemented by way of a scheme of arrangement of May Gurney. Each May Gurney shareholder will receive 0.8275 new Costain shares for every scheme share held, resulting in Costain shareholders holding approximately 53% and May Gurney shareholders holding approximately 47% of the issued share capital of Costain at the time the merger becomes effective.
The Board of Costain believes the Combined Group should be able to achieve recurring annual pre-tax cost synergies of approximately 10 million pounds as a result of the merger, with approximately 7.5 million pounds expected to be realised in the financial year ending 31 December 2014 and the full 10 million pounds in the financial year ending 31 December 2015. Post synergies, the Costain directors expect the merger to be double digit earnings enhancing for Costain for the financial year ending 31 December 2014.
May Gurney intends to declare a second interim dividend of 5.6 pence per May Gurney Share in lieu of a final dividend for the year ending 31 March 2013.
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