The sale price is just £1, but Mears will get £7 million if the company is subsequently re-sold in the future.
In addition, Mears is converting an existing intercompany loan into a £2m interest bearing secured loan to be repaid after five years, and a £7m unsecured loan, which is to be repaid out of sums received on certain existing contracts and a share of future profits generated.
Haydon specialises in the design and installation of M&E services, primarily for new build residential developments. Haydon is run by its managing director, David Cutler, from its head office in London's Docklands.
The acquisition is being made through a specially created acquisition vehicle, Curzon 3003 Ltd, owned by four Haydon directors: David Cutler, Anthony Percival, Gary Young and Glyn Mays,
Haydon was acquired by Mears from Johnson Controls in 1999 as part of an expansion plan. However, more recent diversification has been into the domiciliary care market, initially through the acquisition of Careforce in 2007. Haydon is loss-making and in 2012 represented 9% of Mears’ turnover. It is no longer considered core to the business.
In 2012, Haydon generated revenues of £62.3m and a pre-tax loss of £1.8m. For the first haf of 2013 it generated unaudited revenues of £18.7m and a loss before tax of £1.4m. Gross assets as at 30 June 2013 were £29.8m and net assets £7.5m.
Mears Group chief executive David Miles said: "I am delighted to have agreed a sale of Haydon, our M&E division. Haydon played a significant role in the growth and maturity of Mears over the last 14 years. I would like to thank the Haydon management team and wish them future success. The activities of Haydon have now become non-core and the transaction is good for Mears and will now allow the group to focus solely on growing its core operating divisions."
Haydon was originally formed in 1885 by Captain William Haydon as a hardware store, selling everything from guns to sewing machines. The company was later developed in 1925 when bought by William Hayward and remained in the Hayward family until 1994 when it was sold to Johnson Controls.