Carillion takes stake in Canadian firm and announces big contract wins

WOLVERHAMPTON-based support services giant Carillion has acquired a 49% stake in Canada’s Bouchier Group for £24m.

And it has announced contract wins worth £675m with highways agencies in Canada and Lancashire County Council.

Under the acquisition agreement, Carillion has options to acquire a further 36% interest in The Bouchier Group – a fellow support services firm – after five years and the remaining 15% over six to ten years.

The total consideration for the remaining 51% will be capped at a maximum of £43.1m.

The Bouchier Group, which is based in Alberta, provides a range of services, including road maintenance, infrastructure services and facilities management, primarily for customers in the oil sector. The acquisition complements Carillion’s existing support services activities in Canada and provides access to substantial new growth markets.

At the transaction date, The Bouchier Group had gross assets of £27.60m. In the 12 month period to 31 March 2012, The Bouchier Group had revenue of £46.25m and pre-tax profit of £7.76m.

The vendors, David Bouchier and Nicole Bourque-Bouchier, will remain president and chief executive, respectively, of The Bouchier Group following the acquisition.

Carillion chief executive Richard Howson said: ”Acquiring this interest in The Bouchier Group is an important strategic step in the development of our support services business in Canada.

“The Bouchier Group has a successful track record in delivering high-quality services to a portfolio of blue chip customers. Its knowledge and skills complement our own and this will create significant new opportunities for us to grow our support services business in Canada through extending our services offering to new and existing customers.”

Meanwhile, Carillion has been selected for highways maintenance contracts in Canada worth some £525m.

The firm has won long-term contracts to provide year-round routine maintenance services for provincial highways in Ontario and Alberta.

In Ontario, the Ministry of Transportation Ontario has awarded Carillion the area maintenance contracts for Kingston West and Bancroft, worth approximately £120m over 12 years and selected Carillion as the preferred bidder for the Thunder Bay area maintenance contract, worth £105m over 11 years.

The Alberta Ministry of Transportation has selected Carillion as the preferred bidder for five contract maintenance areas, worth some £300m over ten years.

And back in the UK, Carillion has been selected as strategic partner by Lancashire County Council for a services contract initially worth up to £150m.

The firm has been chosen as the preferred bidder to become a strategic partner for the delivery of a range of property services for east and north Lancashire.

This innovative contract will initially focus on property development, which is expected to be worth up to £150m over ten years, but this has the potential to increase as the scope of the services to be provided by Carillion can be extended under the terms of the contract.

Carillion also published its pre-close trading update today for the 12 months to the end of this calendar year.

The firm said it expects to deliver a robust financial performance in 2012, with growth in operating profit despite market conditions remaining challenging.

It said revenue will be lower than in 2011, due principally to the planned re-scaling of UK construction, but the group’s total operating margin is expected to increase.

Carillion says it continues to have a strong balance sheet, with year-end net debt expected to be slightly above the half-year position of £115m.

“We have continued our strategy of diversifying the mix of our borrowing facilities with the addition of further private placement funding of some £175m, which expires between 2017 and 2024, at an average interest rate of 4.75%,” it said.
 
This takes the group’s total committed borrowing facilities and private placements to more than £1bn.