Kier agrees £110m sale of housebuilding business

The majority of its investments have been in the renewable energy sector, but it is also currently a backer of Annington Homes, which owns nearly 60,000 former and current Ministry of Defence homes.

The deal comes nearly two years after Kier Group first put its housebuilding business up for sale in a bid to reduce the massive debt pile it had accrued. The decision came after a two-month strategic review of the company and a £250m rights issue was announced to try and reduce the debt pile.

At the time it said the sale would result in more than 1,200 staff members leaving the company and create annual savings of £55m for Kier.

The deal is now expected to complete in mid-June, subject to the approval of Kier shareholders, and will see Foster BidCo pay £110m in cash on completion. The investor has also paid a non-refundable £40m fee to Kier which will be held in escrow and released on completion.

Kier said the deal would help simplify its business and remove the capital requirement to support land acquisition and remove off-balance sheet debt associated with certain Kier Living joint ventures.

Kier Living operates across some of the most affordable areas in England and largely focuses on delivering affordable low-rise, mixed-tenure suburban homes, mainly through open market sale. Last year the company posted an £89m loss, which was largely driven by an unpayable inter-company loan.

Andrew Davies, chief executive of Kier, said: “The actions we have taken over the past two years have created a strong operational platform for sustainable profitable growth and free cash flow.

“The disposal of Kier Living delivers another key milestone in the group’s strategy to simplify the business and strengthen its balance sheet.”