May Gurney Integrated Services has surged 34% on hopes of a bidding war for the highway, rail and utilities maintenance group.
Construction group Costain, down 13p at 290p, said on Tuesday it had agreed to merge with May Gurney to create a company with annual revenues of £1.6bn. The proposed all share deal valued May Gurney at 252p a share or £177m in total. But rival Kier said it had made previous attempts to agree a deal with May Gurney and was now considering an offer. May Gurney is currently 64.5p higher at 249p while Kier is down 39p at £11.40. Andy Brown at Panmure Gordon said:
There are similarities between this deal [for May Gurney] and Costain's previous attempt to acquire Mouchel; unfortunately the market did not warm to that deal due to some operating issues at Mouchel. May Gurney have had a few upsets in recent months including contract issues and management change. This announcement may create further interest around May Gurney considering the potential synergies of creating integrated services - possibly Carillion, Interserve or even international contractor like Skanska may have a look.
Or indeed Kier.
