Kier offloads fleet and passenger arm for £17.9m

KierKier has sold off its fleet and passenger services (FPS) business through a management buy-out funded by Leeds-based private equity investor Endless for £17.9 million in cash.

The sale includes the transfer of FPS’ finance lease debt of approximately £32m (as at 30 June 2015).

FPS is a provider of specialist vehicle contract leasing and fleet management services to public sector clients and Kier’s local authority highways and utilities businesses. FPS became part of Kier as a result of the May Gurney acquisition in 2013.

Kier said the business FPS has since been under review “in light of Kier’s disciplined approach to capital allocation and its strict return on capital criteria”.

In the year ended 30 June 2014, FPS reported third party revenues of £36m, a profit before interest and tax of £4m and had gross assets of £55m. In the year ended 30 June 2015, FPS’ estimated third party revenues and profit before interest and tax are £34m and £5.6m, respectively.

Kier and FPS have entered into a five-year agreement under which FPS will continue to supply Kier with fleet services to its local authority highways and utilities businesses.

Proceeds from the sale will be used to reduce Kier’s debt and finance leases and to fund growth opportunities in line with Kier’s strategy.

Haydn Mursell, Kier’s chief executive, said: “FPS was acquired as part of the May Gurney transaction. However, in light of our strict return on capital requirements, we concluded that it would be appropriate to dispose of FPS to a specialist operator which will be managed by the existing management team.”

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