Serco revises agreement to buy Carillion health facilities contracts

Serco Group updated the market on its planned acquisition of a portfolio of selected UK health facilities management contracts from certain subsidiaries of Carillion on Wednesday.

The FTSE 250 firm said a revised business purchase agreement (BPA) had now been signed with the special managers and provisional liquidators acting on behalf of the relevant Carillion subsidiaries.

It said the agreement covered substantially all of the assets that were the subject of the previous agreement.

Upon the receipt by the special managers and provisional liquidators of the requisite third-party consents, each individual contract would be transferred to Serco on a cash-free, debt free basis, with the consideration to be paid in instalments and to be satisfied using Serco's existing financing facilities.

“If all the contracts are transferred to Serco under the revised BPA process, the total consideration payable would be £29.7m,” the Serco board confirmed in its statement.

“The potential revenues and profitability of the contracts being transferred under the BPA are substantially unchanged from those indicated in our announcement of the 13 December 2017; the change in consideration reflects Serco's re-evaluation of potential liabilities, indemnities, warranties and the additional working capital investment required as a result of Carillion's liquidation.”

As it had already noted, Serco said it would only include the effect of the transaction within its financial forecasts once there was certainty regarding the necessary consents for each contract.

Serco added that it would continue to work with all relevant parties to seek to give effect to achieving the transfers.