Around 2,500 jobs have been saved at troubled UK social housing group Connaught, after specialist construction group Morgan Sindall acquired the majority of its assets and contracts.
Connaught, which carries out essential maintenance and repairs to homes, called in administrators to its main social housing unit after government cuts caused contract deferrals, leading to financial difficulties.
Administrator KPMG had warned of potential redundancies among Connaught's 10,000 staff.
Connaught’s operations will now be merged into Morgan Sindall’s affordable housing division, Lovell Partnerships. Approximately 2,500 employees will transfer to Lovell, and maintenance services will continue without interruption, the company said.
Commenting on the deal, John Morgan, executive chairman of Morgan Sindall, said: “This is a step change for Lovell. The acquisition significantly increases the scope and scale of our planned and reactive maintenance activities and further develops our market leading position.
“Our focus now will be to ensure a smooth handover of the contracts and to minimise disruption to essential maintenance services. We look forward to working with our new and existing clients and to provide them with a high level of service, as well as protecting jobs on the contracts we are acquiring.”
He concluded: “Through the experience built up at Lovell over many years, we are happy with the terms on which we are acquiring these contracts. The Board believes that this acquisition represents excellent value for our shareholders.”
Morgan Sindall paid £28 million for Connaught’s contracts and assets, which Morgan Sindall said represented a discount to their net book value.
In the year to 31 December 2009, Lovell reported an operating profit of £14.9 million on revenue of £374 million. The new contracts are expected to generate approximately £200 million of additional annual revenue.
