Defence and support services company VT Group (VT) has bought Project Services from British Nuclear Group (BNG) for up to £75 million.
The initial payment is £45 million but there is also an earn-out based on the company's profitability for the year ending 31 March 2008, with an additional payment of up to £30 million, giving a maximum total of up to £75 million.
Industry union Prospect said it has concerns over the bid’s failure to reach the expected sale price of between £130–150m.
BNG Project Services, which is a subsidiary of British Nuclear Fuels Ltd. (BNFL), had a turnover of £86.9 million in the financial year to March 2007, with profit before tax of £8.4 million and underlying operating profit of £6.4 million. Gross assets are £35.6 million.
BNFL chief executive officer Mike Parker said: “I am delighted that VT Group will be the new owners of Project Services as this achieves our objective of securing a good home for the business and, importantly, its people. The sale has generated additional value for our shareholders over and above the £8.3 billion that BNFL has already returned to government.”
Project Services employs about 750 staff with experience in nuclear waste and decommissioning, reprocessing and design of new nuclear facilities.
VT Group chief executive Paul Lester said: “Project Services is highly regarded as a leading provider of nuclear decommissioning and waste treatment engineering services. The acquisition provides VT with entry to a new market where our core competencies in engineering services and the management of critical assets for government customers are well suited.
“The market for nuclear decommissioning in the UK alone is currently worth around £1 billion per year, of which a significant part is available to Project Services. The business also has a significant presence in the homeland security sector where we are becoming increasingly active. We will help Project Services to complete the transition from public to private sector ownership and will ensure it applies strong commercial practices. The longer term growth prospects for the business are strong in the light of the anticipated nuclear new build programmes in the UK and other key territories.”
Industry union Prospect’s national secretary Mike Graham said: “Today’s decision is welcomed not only by the majority of Project Services staff but also by Prospect. We already have a long established relationship with the VT Group, which is an employer that works closely with their recognised trade unions.
“Based on past experience and on their intention to develop and grow Project Services’ business we believe the VT Group are a good home. Our members look forward to working with the new employer and focussing on business growth, staff development and providing new opportunities for staff. Clearly terms and conditions of employment will be at the forefront of our work.“
In its first two years of operation, the business has gained work on civil nuclear sites in the UK, including the Sellafield and Magnox reactor sites, and is also involved in work on behalf of the UK Ministry of Defence, Department for Business, Enterprise and Regulatory Reform and the Home Office.
In terms of international work, Project Services has a foothold working for EDF, Rosatom and Japan Nuclear Fuels.
The Russian programme is funded through the European Bank for Reconstruction and Development (EBRD), which also supports a project management unit at Kozloduy, in Bulgaria. Project Services manages this project for EBRD.
Rothschild acted as financial adviser to BNFL on the transaction and legal advice was provided by Freshfields Bruckhaus Deringer.
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