Kier Group has agreed to the £110m sale of Kier Living to Foster BidCo, a newly formed company owned by Guy Hands, the founder of Terra Firma
The sale of Kier Living is conditional on Kier shareholders’ approval at a general meeting expected to occur in early May.
Foster BidCo will pay £110m for Kier Living, which is expected to take place before mid-June.
Foster BidCo has paid a non-refundable deposit of £40m to the company, which will be held in escrow and released on completion of the sale.
Kier Living is a housebuilding business with established operations across four of the most affordable regions in England.
Kier Living’s principal focus is providing well-priced, low-rise, mixed-tenure suburban family homes through open-market sales.
The Kier board unanimously believes that the sale of Kier Living recognises the strategic value of Kier Living and is in the best interests of shareholders and other stakeholders as a whole because it will:
- Facilitate a material reduction in the group’s net debt
- Reduce the volatility of the group’s working capital
- Remove the capital required to support land acquisition within Kier Living to maintain its current level of sales completions
- Remove the off-balance-sheet debt associated with certain of Kier Living’s joint ventures; and
- Simplify the group and allow it to focus on its core, market-leading businesses in infrastructure services, construction and property.
The sale of Kier Living is another step in the management’s strategy to simplify the group and to create a strong, resilient and flexible balance sheet, providing Kier’s clients, customers, suppliers and other stakeholders with greater confidence in the company.
‘Strengthen the balance sheet’
Andrew Davies, chief executive officer of Kier Group, said: “The actions we have taken over the last two years have created a strong operational platform for sustainable profitable growth and free cash flow.
“The disposal of Kier Living delivers another key milestone in the group’s strategy to simplify the business and strengthen its balance sheet.”