Carillion, the FTSE-250 construction services firm, has made a recommended bid of 120p a share for Eaga, which values the energy support services company at £307 million. Although Carillion does not have a presence in Eaga’s sectors, it wants to use the business to build the largest independent energy services provider in the UK as well as take advantage of cross-selling opportunities for its own services.The bid includes a dividend of 1.2p a share and a cash bid of 118.8p a share. There is also a share alternative based on a Carillion share price of 385.2p. Carillion will issue a maximum of 31.5 million shares and, if demand is greater, acceptances will be scaled down with the rest of the consideration paid in cash.
Carillion has been seeking exposure to the low carbon and energy efficiency markets, so acquiring Eaga will give it a strong platform. Market changes have made trading more difficult for Eaga, which will benefit from being part of a larger, stronger group.
The combined group will have annual revenues of £3 billion. Carillion expects to make savings of £9 million by the end of 2013, although that will mean one-off costs of £15 million.
Eaga has been trying to set up a business to benefit from the feed-in tariffs for small scale residential solar installations. Carillion has experience in private finance initiatives (PFIs). The venture, in which Eaga would take a 20% stake, would have £300 million of funding, of which £75 million would be equity. However, the government review of feed-in tariffs, particularly in the area of solar, could make it more difficult to raise the money.
12-month high/low: 149.7p/51.25p
Market cap: £297m
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