Balfour Beatty entered the fray several months after its rival but trumped it with a £42m bid, announced on Wednesday.
Mansell chief executive Philip Cleaver said: “There wasn’t much between the offers. We made a decision to enter exclusive talks
with Balfour Beatty six weeks ago.”
Mansell shareholders now have three weeks to approve the deal.
The proposed offer, tipped by Building last month (3 October,
page 18), also means that Mansell becomes part of a listed company. The management has long harboured ambitions to float the company but has been unable to
do so because of a £30m pension deficit. This also reduced the value
of the company.
The pension fund will continue to be run by Mansell, which aims to erase the shortfall over the next
10 years, but Balfour Beatty will cover it if there are any unforeseen difficulties. Mansell was valued by Balfour Beatty at £55m but after accounting for the deficit and associated deal costs this was reduced to £42m.
Mansell will be a stand-alone business within the Balfour Beatty empire. Its chairman, Eric Anstee, and two non-executive directors
are expected to leave but no redundancies are expected among the workforce.
A spokesperson for Balfour Beatty said that the companies were a good fit because they operated
in different markets. He said: “Balfour Beatty works in the upper stratosphere of projects, like the major PFIs, and the average project is worth £11m-£12m, with a two-year duration. Mansell’s average is £1m over six months. It also works in social housing and fit-out, where we don’t operate.”
The deal gives Mansell access to projects that Balfour Beatty works on, such as fit-outs on PFI projects.
Mansell’s financial targets remain unchanged. It made a pre-tax profit last year of £10.6m with a 2% margin. It aims to raise this to 3% in three years.
Analysts praised the deal, but were surprised that Balfour Beatty had bought a UK firm. Last year the contractor tried to buy JA Jones in an attempt to expand into the USA. One said: “I thought its ambitions were international, not local.”
Mansell had been courted by the Middle Eastern joint venture for more than a year but it was caught off guard by Balfour’s intervention about three months ago.
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