Business
Acquisition of contracts from
Acquisition of contracts from.
About this update from Morgan Sindall Group Plc
[{"type":"text","content":"\n RNS Number : 4635S Morgan Sindall Group PLC 10 September 2010 \n \n\n \n10 September 2010\n \nAcquisition of social housing contracts from Connaught\n \nMorgan Sindall Group plc (\"The Company\" or \"Morgan Sindall\"), the construction and regeneration group, today announces that its Affordable Housing division, Lovell Partnerships (\"Lovell\"), has reached agreement to acquire the majority of the ongoing contracts and their related assets of the social housing division of Connaught plc, allowing essential maintenance services to continue without interruption. Around 2,500 employees connected with the ongoing contracts will transfer to Lovell as part of the agreement. \n \nA 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. At 30 June 2010, Morgan Sindall had net cash of £138m and the Group will continue to have a strong financial position following the acquisition.\n \nThe acquisition is consistent with Morgan Sindall's long-term strategy to achieve leading positions in its chosen markets. The acquisition will significantly enhance Lovell's market leading position in the affordable housing sector and creates a national, full-service business delivering planned and reactive maintenance as well as new-build social and open market affordable housing. 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.\n \nIn the year to 31 December 2009, Lovell reported an operating profit of £14.9m on revenue of £374m. On 30 June 2010, the Group announced the strategic acquisition of Powerminster Gleeson Services to extend the division's response maintenance capability and geographic reach. \n \nCommenting on the acquisition, John Morgan, Executive Chairman, Morgan Sindall Group plc, said:\n \n\"This is a step change for Lovell. The acquisition significantly increases the scope and scale of our planned and reactive maintenance activities and further develops our market leading position.\n \n\"Our focus now will be to ensure a smooth handover of the contracts and to minimise disruption to essential...