Source says that AWG will demerge Morrison's facility and utility businesses and sell them off as separate entities
Utilities company AWG is set to sell subsidiary Morrison’s £600m-turnover support services division.
A source close to the firm said AWG was planning to offload the support services division, which comprises facilities services and utility services. It will first demerge the businesses and sell them off as separate entities.
The plans are at an early stage but AWG is expected to announce the decision to demerge when its next set of results are announced in September.
The news comes five months after AWG sold Morrison Project Investments and Morrison Construction to Galliford Try, the contractor and housebuilder, for £42m.
The utilities business increased turnover 37% to £405m in the year to 31 March, after winning work from Transco and Scotia Gas, Thames Water and Anglian Water. It more than doubled operating profit to £12.7m.
Turnover within the facilities services business rose 28% to £192m, and it more than doubled its operating profit to £7.9m. Contracts won by the division include Decent Homes work in Newcastle and Gateshead, the impact of which is expected to be seen in next year’s results.
Its wins last year included a 10-year, £54m repair and maintenance contract in Redbridge, Essex, and a 30-year PFI schools contract in the Highlands worth £100m. The business operates in Scotland, north-east England, the Midlands, London and Essex.
A spokesperson for AWG said: “The company will make an announcement on the businesses in the next set of figures in September. No decision has been taken about their future yet.”
But the marriage between Morrison and its parent company has been unhappy since 2000, when AWG made the acquisition.
AWG claimed that Sir Fraser Morrison, the founder of Morrison, had inflated the value of the company, which AWG originally bought for £263m. AWG was seeking £130m but made an out-of-court settlement in February, the terms of which were confidential.
AWG made a loss of £56m when it sold Morrison Construction and Project Investments to Galliford Try because £93m of goodwill was written off.
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