Miller Construction's order book of £1.4bn doubles Galliford Try’s order book at a stroke to £2.8bn.
Galliford Try said “the tactical acquisition of Miller Construction is consistent with Galliford Try's stated strategy of disciplined and selective growth in its construction business, with a particular focus on developing our positions on regional and national frameworks”.
Galliford Try is now targeting 2018 construction turnover of £1.5bn instead of its previous target of £1.25bn. Its directors said they had got a bargain.
Miller Construction reported 2013 revenues of £409m and a loss before interest and tax of £4m. In the past year Miller Construction has restructured or exited a number of mainly loss-making contracts and is expected to return to profitability in the current year.
Miller Construction had gross assets of £232m at 31 December 2013. Under the terms of the deal, Miller Group has agreed to transfer Miller Construction with a nil net assets balance, including a cash balance of £23m. In addition, Miller Construction has a PPP portfolio with an invested value of approximately £14m.
Galliford Try has identified a total of £7m a year of cost synergies, the majority of which it would expect to realise during the financial year ending 30 June 2015. Restructuring is expected to cost £4m but despite this the Galliford Try board expect the acquisition to be earnings enhancing in the year ending 30 June 2015.
Galliford Try chief executive Greg Fitzgerald said: "We are delighted to announce the acquisition of Miller Construction, achieved at a very good price and with no net cash consideration. The acquisition brings together two construction businesses with a strong strategic fit and accelerates our strategy of growth into an improving marketplace."