Construction and infrastructure firm Kier shot to the front of the race to snap up service group May Gurney yesterday after announcing it had agreed a price of £221 million to buy the Norwich-based concern.
The prospective deal trumps a previous offer from rival Costain by some 35%, leading opposing executives to “consider their position” on the acquisition.
The two firms would have a combined staff of around 16,000 people and an order book worth around £5.7 billion.
Kier said the buyout would also improve the services on offer to local authorities and utilities.
But the merger is likely to be viewed with caution by May Gurney’s 300 Scottish staff following last week’s news that the company plans to shed 96 jobs north of the border.
Workers at the firm’s Dundee and Falkirk yards were told last week that they are at risk of redundancy following the scaling back of a contract with major client Scotia Gas Networks.
Staff in Aberdeen are also expected to be affected, likely to a lesser extent, but the distribution of the job losses will not be decided until the end of an ongoing 30-day consultation process.
Announcing the recommended offer yesterday, Kier said the enlarged group would return annual pre-tax savings of £20m, “primarily through savings arising from the consolidation of corporate and shared services functions and material procurement savings”.
May Gurney has had a presence in Dundee since 2011, when it bought over Turriff Group in a deal worth up to £23m.
It has eight operating divisions including highway services and waste collection and employs around 6,000 staff UK-wide.
The Dundee site is a base for around 155 workers.
A five-year working agreement between Scotia Gas Networks and May Gurney ended last month, and the two firms have been working to mitigate job losses since September.
Kier already has offices serving the Scottish market in Glasgow, Edinburgh, Aberdeen and Newcastle, and last year bought the construction arm of the Stewart Milne Group for £1m.
That deal saw staff at Milne’s joinery workshop in Auchterarder remain on the firm’s books, moving to join the workforce of the plant’s new owners.
The offer from Kier, which employs 10,000 people in construction, facilities management and property development, has been backed by the board of May Gurney but still requires the support of shareholders.
Costain said it was considering its position after an initially-agreed £160m bid was topped, and would make a further announcement in due course.