Firm set to increase turnover by 拢300m with acquisition of Shepherd鈥檚 engineering and facilities management arms this week
Contractor Wates is set to boost turnover by 拢300m after the formal legal completion of its landmark deal to buy parts of the Shepherd Group last night.
The firm said it has now completed the acquisitions of Shepherd Engineering Services (SES) and Shepherd Facilities Management, together with a significant number of contracts and strategic frameworks from Shepherd Construction.
Wates chief executive Andrew Davies said: 鈥淥ur investment is expected to deliver an additional circa 拢300m in turnover in the first year of trading, projecting us further towards our 拢2bn target and making great strides inthe fulfilment of our long-term growth strategy.鈥�
Completion of the deal will see 1,200 Shepherd staff join the Wates business, which had revenue of 拢1.05bn in the 2014 calendar year. The inclusion of respected M&E specialist SES in the deal will give Wates the ability to deliver its own M&E packages, contrary to many main contractors, which don鈥檛 retain technical specialisms in-house.
Davies said the acquisition was a step toward Wates becoming 鈥渢he UK鈥檚 leader in the construction and property services sector鈥�. He said it gave the firm an 鈥渙utstanding鈥� engineering capability, as well as expertise in offsite manufacturing and specialised construction projects.
According to accounts filed at Companies House, Shepherd Construction and SES turned over 拢240m and 拢208m respectively in the year to June 2014. Financial information was not available for the Shepherd FM brand.
Wates and Shepherd initially agreed heads of terms for the deal in May, having begun talks in December 2014. The two firms announced in July that they had exchanged contracts on the buyout deal.
The deal follows on from the November 2014 acquisition of Purchase Group, further boosting its facilities management and maintenance offers. Wates said its forward order book was now up 50% on the same point a year ago.
Speaking when the [Shepherd] deal was first agreed in May, Tony Williams, analyst at 黑洞社区 Value, said it was a 鈥渂ig step鈥� towards Wates鈥� target of doubling turnover to 拢2bn. Williams said introducing Wates management at the acquired Shepherd construction businesses could be the 鈥渒ey to turning it around鈥�.
He added: 鈥淭he challenge for Wates is to get in there and make sure there are no problem contracts and if there are to fix them and then run ahead with the business.鈥�
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