May Gurney, the infrastructure support services company providing essential maintenance and enhancement services to clients in the public and regulated sectors, has announced this morning that it has acquired Turriff Group Limited one of Scotland's largest utility infrastructure maintenance companies, for a cash consideration of up to £13.6 million.
Under the terms of the transaction May Gurney will pay an initial cash consideration of up to £8.6 million, with a further £5 million payable over three years dependent upon a number of key performance indicators being met, including future revenue targets and key employee retention. In addition, May Gurney is assuming approximately £9.4 million of debt.
May Gurney said the acquisition delivered key benefits, including:
- Further strengthens its position in the utilities maintenance market and gains entry to the £2.4 billion support services market in Scotland, with opportunities in local government and rail.
- May Gurney gains access to the UK's regulated £1.7 billion gas marketplace which is displaying strong and sustained growth with dependable, long-term income streams.
Turriff's acquired order book is approximately £90 million, with available extensions worth up to an additional £70 million. Its key long-term clients include Scotia Gas, Scottish Water and Scottish & Southern Energy.
The transaction, which is expected to be earnings accretive in the first full year of acquisition, further underpins May Gurney's existing £1.4 billion forward order book and long term earnings visibility. May Gurney said the acquisition offered the potential to achieve "cost synergies" of circa £0.3 million per annum.
Headquartered in Aberdeen, Turriff has more than 550 employees and is one of Scotland's largest utility infrastructure maintenance companies with market-leading positions in gas, water, electricity and multi-utility services.
For the year to 31 December 2010, based on unaudited management accounts, Turriff had earnings before interest, tax, depreciation and amortisation of £2.5 million on revenues of £41.0 million. At completion, Turriff had a balance sheet showing total assets of approximately £18 million. Under the terms of the deal, key members of Turriff's senior management team have been incentivised to remain with the business.
May Gurney Chief Executive Philip Fellowes-Prynne commented:
"We are delighted to welcome Turriff to the May Gurney group, whose focus on developing long-term client relationships and reputation for assured operational delivery is so aligned to our own.
This transaction meets with our strategy of developing wider services with existing clients and increasing our geographical spread. Turriff will provide access to the power and gas maintenance sectors, the Scottish support services market and consolidates our position in water. These are all key growth markets with dependable, sustainable income streams which will provide us with significant opportunities to develop long-term relationships with new clients."
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