Morgan Sindall swoops on Connaught

CONSTRUCTION group Morgan Sindall has completed a £28m deal to acquire the majority of ongoing contracts of the social housing division of Connaught and transer 2,500 staff to its business.

Connaught Partnerships, which is headquartered in Leeds and employs 4,400 staff across the UK providing maintenance services to social housing associations, went into administration alongside the building services group’s parent company, Connaught, which is based in Exeter, on Wednesday.

A deal, which has seen Morgan Sindall’s Tamworth-based affordable housing division Lovell Partnerships acquire the contracts and their related assets from Connaught Partnerships, was completed late yesterday evening.

Morgan Sindall said the deal would allow “essential maintenance services to continue without interruption” and around 2,500 employees connected with the ongoing nationwide contracts will transfer to Lovell as part of the agreement.  
 
Morgan Sindall said the sum paid for the assets was a discount to their net book value and has been paid from existing cash resources.  

John Morgan, executive chairman of Morgan Sindall, said: “This is a step change for Lovell. The acquisition significantly increases the scope and scale of our planned and reactive maintenance activities and further develops our market leading position.
 
“Our focus now will be to ensure a smooth handover of the contracts and to minimise disruption to essential maintenance services.  

“We look forward to working with our new and existing clients and to provide them with a high level of service, as well as protecting jobs on the contracts we are acquiring.
 
“Through the experience built up at Lovell over many years, we are happy with the terms on which we are acquiring these contracts. The Board believes that this acquisition represents excellent value for our shareholders.”
 
Mr Morgan said Lovell, which had an operating profit of £14.9m on revenue of £374m last year, expected the new contracts  to generate approximately £200m of additional annual revenue.
 
A team from KPMG, which was appointed administrators to Connaught, advised on the deal.

Giles Taylor and Mark Firmin from the firm’s Leeds corporate finance team, and Brian Green and Dave Costley-Wood from its North West restructuring team, worked on the deal.

Connaught Partnerships also has hubs at Glasgow, Bromsgrove, Crawley and Exeter.   

Connaught’s two other operating businesses, Connaught Compliance and Connaught Environmental, were not affected by the administration.

Connaught Technical Services, a smaller company in the Partnerships business, also went into administration.