More reasons to chop at Morrisons for AWG
A deal that looked at the outset as if it could turn into a horror story is set for a happy ending for AWG, the Huntingdon company that remains one of the best-run businesses in Britain.
AWG has agreed to sell Morrison Construction Services Ltd, its project investments business and investments in two early stage PFI projects – Defence Housing Executive (DHE) Portsmouth and Highland Schools – to Galliford Try Plc for around £42 million.
AWG has also agreed with Galliford Try that, under its new ownership, project investments will help AWG in the management and future sale of its six remaining PFI investments, which have a current book value of £7.6m.
Morrison Utility Services and Morrison Facilities Services, which form the majority of the Morrison group, are not part of the deal.
Jonson Cox, group chief executive of AWG Plc, said: “Two years ago, faced with an unprofitable construction business, we set out to re-build the performance of Morrison Construction Services and improve financial and commercial discipline. The sale is a good result for all parties.”
AWG acquired Construction Services as part of its acquisition of the Morrison group in September 2000. Following the change of AWG management and a business review in the first half of 2004, Morrison was restructured and a more disciplined, lower risk business model adopted to improve commercial focus and build value.
Construction Services has around 1,500 employees based in eight principal UK offices and provides services in building and infrastructure to both public and private sector clients.
Based in Edinburgh, Project Investments is a niche support activity for the Morrison business with 15 employees, focusing on bidding for selective PFI projects, mainly in Scotland.
Its latest project, which reached financial close at the end of October, was to provide serviced accommodation for Defence Housing Executive personnel in Portsmouth.
The Highland Schools project incorporates the design, construction and financing of 11 schools for The Highland Council.
The investment represents a 50 per cent equity stake in the project company and is anticipated to reach financial close shortly.
Morrison has made a strong commitment to this PFI project, which Galliford Try considers a key strategic contract. Both parties are committed to the successful completion of this high profile project.
Morrison Construction Services generated sales of £333m and an operating profit of £0.4m in the year to March 31.