Bucknall to buy itself out of City

by Kathy Watson



Bucknall is to buy itself out of the Stock Exchange in a bid to double its construction throughput to £2 billion over the next three years.

The group plans to take on non-core services for Blue Chip clients in a new twist to the Private Finance Initiative. Its aggressive move into facilities management PFI includes plans to buy an engineering company - probably a mechanical and electrical contractor - as well as an IT specialist. A prime mover in the deal is Oliver Jones, former head of Symonds Facilities Management.

Bucknall announced its plan last week with its new backers, Citex Corporation, which includes some of the Bucknall chiefs. In the move, Bucknall would be absorbed by Citex in the management 'buy-in'. Shareholders have been offered what one analyst called a "bloody good" offer.

Retiring md David Bucknall will receive £1.5 million for his stake. Steve Lee, group operations director of Bucknall and managing director of Citex will get £460,000 which he plans to plough back into the new company.

Lee said: "We will then have the full range of professional skills for one-stop outsourcing. By developing closer long term relationships with partners we will be able to deliver more timely and cost-effective solutions with construction at the core."

He said that private sector clients want to reap the benefits of PFI. Several clients have expressed interest in hiving off their property portfolio to property and facilities management specialists via real estate investment trust and other routes in order to concentrate on core business, said Lee.

The first step of the management buy-in involves Bucknall buying its shares through Citex. Its American backer, Donaldson, Lufkin & Jenrette, is offering to buy the shares on behalf of Citex for 103p, a 73 per cent hike on the trading price of 59p last week, valuing the company at £15.4 million.

Acceptances have already been received from 57 per cent of shareholders with the remainder thought unlikely to resist. If more than 90 per cent have assented by the 22 September deadline the deal will go ahead.

Oliver Jones, chief executive of Citex, is a former BAA man who set up Symonds Facilities Management, which was taken over by Compagnie Generale des Eaux (now Vivendi) in 1993. Jones quit in 1997 to become group property and logistics director of Regus, which specialises in providing fully staffed business centres and he is a key force behind the Bucknall plans.

Bucknall has performed poorly since it was floated. "Their performance was ragged," said investment director Roger Brocklebank at Albert E Sharpe, "It makes sense for a small company like them to go private because understanding shareholders will give them a couple of years of grace."

Bucknall had a turnover of around £40 million last year with pre tax profit of £1.6 million. Its clients have included British Airways, the Halifax, Prudential, and the Midland Bank. If the deal goes through Bucknall's gearing should fall from its current level of 61 per cent to less than 25 per cent.

Amanda McIntyre, senior policy adviser at the Confederation of British Industry and a member of the Construction Clients' Forum called the Bucknall initiative a "healthy sign".