Carillion signs health FM deal

Carillion has entered into a definitive business purchase agreement for the disposal of its UK healthcare facilities management business.

The announcement comes nearly two months after the firm signed heads of terms with FM giant Serco for a portfolio of 15 sites, which Serco will acquire on a cash-free, debt-free basis after Carillion receives shareholders’ approval. 

Keith Cochrane, Carillion's interim chief executive, said: "I am pleased we have been able to successfully conclude this transaction which will contribute to our efforts to reduce net debt." 

With annual revenues of around £90m and an average remaining term of 14 years, Serco anticipates the full transfer of the portfolio would add nearly £1bn of core contracted revenue to its order book. 

Carillion’s contracts involve the provision of facilities management services to NHS sites across the UK, covering five acute hospital trusts and around 20 other public sector organisations.  

Rupert Soames, chief executive at Serco, said: “We look forward to taking on these high-quality, long-term contracts which will add significant scale to our health business, and will enable us to further improve the quality and efficiency of services we provide to the NHS and our other customers.” 

The two parties agreed a total consideration of £47.7m for the transaction, which should be completed by the end of 2018. 

Lazard & Co is advising Carillion on the disposal. 

Carillion is attempting to shed £300m of non-core assets as part of its strategic review to reduce net debt. 

The firm has recently warned that it might breach its financial covenants by the end of the year, with potential delays affecting PPP disposals.