The new company will be called Costain May Gurney and have combined revenues of approximately £1.6bn per annum, putting it firmly in the top 10 of UK construction contractors.
It will be led by current Costain CEO Andrew Wyllie with Costain finance director Tony Bickerstaff continuing to look after the money.
Costain shareholders will hold approximately 53% and May Gurney shareholders will hold approximately 47% of the issued share capital.
The merger brings together Costain’s strength in construction and energy with May Gurney’s in maintenance and municipal services.
The board of Costain believes that the combined group could save £7.5m in overhead costs in the first year after merger, and £10m a year thereafter.
The combined group's headquarters and registered office will be located at Costain's office in Maidenhead. May Gurney’s office in Trowse in Norfolk will be retained as a shared services centre and hub office.
The combined company will have approximately 11,000 employees at the outset. Approximately 150 redundancies are expected initially.
The merger is conditional on shareholder approval but Costain has already got the backing of 32.5% of May Gurney’s shareholders and 42.7% of its own shareholders. If approved, the deal will complete in the first week of June, according to the indicative timetable.
David Allvey, non-executive chairman of Costain – who will stay in post – said: “The Costain strategy has been extremely clear: to become a leader in the design, delivery and maintenance of national infrastructure. The announcement today is a highly significant step in that process. Together with May Gurney, we will have the added experience and skills to underline our leadership status and to provide a platform for new growth and success. We see this coming together of two established UK companies as good news for all our stakeholders. Our customers are increasingly demanding a broader range of integrated services and this powerful combination will enhance our status as a Tier One engineering solutions provider.”
Baroness Margaret Ford, non-executive chairman of May Gurney, who will be deputy chairman of the new group, added: “May Gurney and Costain have highly complementary businesses. The markets in which we operate offer tremendous opportunities for future growth. The combination of our two companies and the strong heritage we bring will position us very well to respond to those opportunities. Our objective is to deliver even stronger partnerships with our clients, superior returns for our shareholders and increased opportunities for our staff.”
Costain's publicity people have released the following piece of film in the style of a soft TV news interview with David Allvey and Baroness Margaret Ford.