Gleeson sells engineering division to Black & Veatch for £36m.

MJ Gleeson has announced the name of the buyer of its engineering division as Black & Veatch. The deal will cost the US-based consulting and construction group £36m.

Most of the division’s operations are in the water sector, delivering construction projects by way of alliances with water utilities. Gleeson engineering’s main office is in Leatherhead, Surrey and there are 950 employees working out of seven business units.

The business is led by Tony Collins who has been with Gleeson for 28 years. He became divisional managing director in 2001 and oversaw the division’s successful Asset Management Programme 4 (AMP4) strategy which resulted in all existing AMP3 alliances (with South West Water, Thames Water and Yorkshire Water) being renewed – with two new alliances (with Severn Trent Water and Northumberland Water) being added to the list.

Subsequently, Collins’ team have reached an agreement with Scottish Water to extend their existing partnership.

Under the terms of the deal, Black & Veatch will only hand over £21m because the engineering division is reported to have negative net assets of £15m. Gleeson is handing these over to the buyer.

In the Gleeson group’s annual accounts to 30 June 2006 the division was reported to have made an operating profit of £2.8m, its assets stood at £40m, including net cash of £21m.

Gleeson has had to part company with numerous parts of its business as a result of a management struggling to cope with a series of financial headaches. It unveiled its strategic review in March. Most actions have now been taken, though the reduction in Gleeson Homes’ activities outside the housing regeneration sector, involving the rundown of non-strategic land holdings, continues.