Kier Living Limited is being bought by Foster BidCo Limited, a newly formed company, ultimately owned by Guy Hands, the founder, chairman and chief investment officer of Terra Firma, one of Europe’s leading private equity firms.
Kier Living will be rebranded as Tilia Homes.
The deal is subject to Kier shareholder approval next month but is expected to complete before mid-June.
In addition, Kier is also continuing to consider a potential equity raise.
Kier Living reported revenue to £55m in the year to 30th June 2020, down from £118m the previous year, making a pre-tax loss of £89.4m.
The buyer has paid a deposit of £40m to Kier, held in escrow and to be released on completion. The £70m balance of the consideration, plus some working capital funding, will also be paid at completion.
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The Kier board put the house-building business up for sale in mid 2019 to reduce debt. It was first reported in December 2019 that Guy Hands was bidding for it. The sale was paused in spring 2020, however, due to the coronavirus outbreak.
The Kier board sees other benefits from the sale, beyond debt reduction – reduce the volatility of working capital, remove the capital requirement to support land acquisition and simplify group structure.
Kier Group chief executive Andrew Davies said: "The actions we have taken over the last 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."
Kier Living chief executive David Bridges said: “The announcement does not in any way change our activities on our developments. Properties will be built by the same team to the same high standards and with the same focus on providing the best possible service to our customers.”
Kier publishes its interim financial results for the six months ended 31st December 2020 on Wednesday 21st April 2021.
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