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Kier closes in on £110m sale of housebuilding division


The construction group Kier is closing in on the sale of its loss-making housebuilding division as it seeks to shore up its balance sheet.

Sky News has learnt that London-listed Kier is within days of entering into exclusive talks about the disposal, with the private equity tycoon Guy Hands among the remaining bidders for the business.

City sources said that a decision could be made by the company’s board as soon as this week.

Guy Hands
Image:
Guy Hands

Mr Hands’ Terra Firma Capital Partners has been circling Kier Living for months, having previously contemplated an acquisition of the business more than a year ago.

The identity of other bidders for the division is unclear, although a source close to Kier said on Monday night: “He [Hands] is not the only game in town.”

Analysts have pencilled in a valuation of approximately £100m for Kier Living – a sum almost equivalent to the debt-laden company’s entire market capitalisation of £122m.

In September, Kier said it was examining another equity-raise alongside the auction of its housebuilding business.

“Kier Living is a strong business but has limited operational synergies with other parts of the group,” it said at the time.

“There is a new management team in place who have reorganised the business into a smaller more cash-focused operation.”

It emerged last week that Kier Living had made a loss of almost £90m in the year to 30 June 2020.

Last year, Kier replaced its chief executive with Andrew Davies, an experienced industry figure who had been due to take up the top job at Carillion shortly after it collapsed in January 2018.

Kier is a significant government contractor, with substantial infrastructure projects on its books including Crossrail, the HS2 rail link and the new nuclear power station at Hinkley Point.

If Terra Firma does clinch the purchase of Kier Living, it would be among Mr Hands’ most significant corporate purchases for years.

Mr Hands is best-known for his ill-fated ownership of EMI, the music group, which ended up in a further set of legal disputes that he eventually walked away from.

Some of his investments have, though, proved to be extraordinarily lucrative.

Kier and Terra Firma declined to comment.

Rothschild, the investment bank, is advising Kier on the sale.



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