Private equity snaps up ANOTHER British jewel: KKR strikes a £2bn deal for Severn Bridge infrastructure firm John Laing
Infrastructure giant John Laing is the latest British firm to fall prey to private equity buyers after KKR swooped with a £2billion bid.
The 403p per share offer was backed by the board and will be put to a shareholder vote.
It is the fourth private equity bid for a FTSE 250-listed firm in less than a fortnight, after approaches were also made to St Modwen Properties, Sanne Group and UDG Healthcare.
John Laing which built the second Severn Crossing (pictured) and the M1 motorway -can trace its roots back to 1848, when its founder first started the business in Carlisle
Bids have also been made for firms such as Aggreko, Signature Aviation and Marston’s recently, triggering concerns of ‘pandemic plundering’.
British firms are seen as cheap after share prices were hammered by Covid-19 outbreak.
The takeover of John Laing, which built the second Severn Crossing and the M1 motorway, needs 75 per cent investor backing to go ahead.
Will Samuel, its chairman, said the bid was ‘attractive’ and offered ‘certain value in cash’ for shareholders.
He added: ‘Whilst the board has full confidence in John Laing’s strategy and management team, it is clear that many of the initiatives are at an early stage of development, retain an element of execution risk and that it will take time for these to deliver value.
‘KKR is a strong partner, providing long-term capital and global expertise to accelerate John Laing’s strategy.
‘This is particularly relevant in the current environment, where there may be significant opportunities to invest in critical infrastructure which responds to public needs.’
Analysts have warned that British companies are seen as cheap after share prices were hammered by Covid-19 outbreak
Shares in John Laing jumped 11.3 per cent, or 40.6p, to 401.6p – just below the offer price. Speculation that KKR would bid sent the stock soaring this month to its highest point since June 2020.
Before that it had been languishing more than 10 per cent below its pre-pandemic levels.
John Laing invests in and owns projects ranging from railway lines to prisons and stadiums.
Its eponymous founder first started the business in Carlisle in 1848, and it became a UK giant, working on the M1 and M40 motorways, the Sizewell B nuclear plant and Coventry Cathedral, before it was split up in 2001.
After that, John Laing focused on infrastructure investment while the construction business became Laing O’Rourke. More recently it invested £4.7billion in high-speed Hitachi trains for the Great Western and East Coast rail routes.
Now, John Laing is set to benefit as major economies plough cash into transport schemes and green technology following the Covid crisis.
KKR is keen to tap into this investment. Tara Davies, partner and co-head of European infrastructure at KKR, said: ‘Under private ownership and with flexible access to capital, John Laing can take a longer-term view as an owner and operator of assets during the next phase of its growth.’
KKR has agreed to partner with infrastructure investor Equitix, which will buy a 50 per cent stake in the British company’s existing assets. John Laing will continue to be run from the UK by the existing management, a source said.