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Kier鈥檚 proposed acquisition of support services firm May Gurney will enable the business to offer an 鈥渆nd-to-end鈥� service to local authority clients, according to chief executive Paul Sheffield.

Sheffield, speaking after , said the acquisition would allow it to bid for highways and other contracts that it had previously had to decline.

The offer outbids by 35% a deal agreed with rival contractor Costain in March, with analysts predicting that Costain is unlikely to be able to rival Kier鈥檚 315p offer, which includes 拢35m in cash (see below).

Sheffield said: 鈥淭his is a really fantastic opportunity to boost our services business in terms of volume, scale and depth, leaving Kier with a really strong mix of businesses that are to some extent counter-cyclical.鈥�

If approved the deal would create a business turning over 拢2.8bn and result in around 200 job cuts from overlapping services. The deal will see Kier combine its 拢445m services business with May Gurney to create a 拢1.1bn turnover services arm deriving two-thirds of its revenues from local authorities.

For local authority clients the deal will add highways maintenance, street lighting and underground services to Kier鈥檚 roster of capabilities. Sheffield said: 鈥淏etween us there will be nothing we can鈥檛 do for local authorities, giving us a really compelling story around integration.鈥�

He said that last year Kier had been forced to turn down an opportunity to bid for a highways maintenance contract for an existing major customer, North Tyneside council, because it didn鈥檛 have the capability. 鈥淣ow we鈥檇 be able to put in a very cost effective bid, combining with the 拢50m of work we already do each year for that local authority.鈥�

In addition the acquisition would add a 拢180m turnover utilities business, mainly in the water industry, and a 拢36m fleet business.

Sheffield said there were no overlapping contracts which would force any customers to retender immediately, but, with the firm identifying 12 councils that already buy services from both, he admitted it was possible 鈥渢here might be one or two who don鈥檛 want to put all their eggs in one basket. But overall we see there are far more doors opening here than closing鈥�.

In Kier鈥檚 offer it said it could find 拢20m of synergies, double the amount identified by Costain, and predicted the return on investment for Kier shareholders would be 15% by 2015.

Shareholders representing 16.5% of May Gurney had signed irrevocable undertakings supporting the deal by the time 好色先生TV went to press, with final shareholder meetings to vote through the deal earmarked for mid June. Costain has until ten days before the shareholder meetings to table a counter offer.

Margaret Ford, chair of May Gurney, said: 鈥淭his is a very good offer for our shareholders who have been very patient over the last year.鈥�

In response to the Kier deal, Costain said it was 鈥渃onsidering its position and will make a further announcement in due course.鈥�