Renew has announced that it has reached an agreement (subject to shareholder approval) to purchase the entire issued share capital of Amco for a cash consideration of £19.8 million.

Amco established in 1970, originally started out as underground construction and tunneling contractor for the UK coal industry and when the coal industry diminished they branched out into other markets including Rail, Energy and Engineering markets.  Amco provide a wide range of design, project management, construction and engineering services, across the Nuclear, Gas, Coal, Wind and Hydro have frameworks with customers including Network Rail, Magnox Electric, E.ON UK, Scottish Power, Scottish and Southern Energy and The Environment Agency. The rail sector accounts for approximately 52% of its turnover, with 48% from the energy and engineering sector. Renew said that it plans to continue its strategy of growing in specialist engineering, both organically and by acquisition. As a result of this Acquisition, in excess of 50 per cent of the revenue will be derived from Specialist Engineering. Amco’s revenue for the 9 month period ending 30 September 2010 was £59.8m and the operating profit was £4.2m.

The Acquisition will be funded with a new £15 million term loan provided by HSBC Bank plc and out of existing cash resources. In addition to this amount, Renew will pay the Vendors compensation for lock-box profits of £0.9 million and deferred consideration of £6.2 million. Both the lock-box profits compensation and the deferred consideration are entirely self-funding and do not represent a further cash funding requirement for Renew.

Commenting on the Acquisition, Brian May, Chief Executive of Renew said:

“We are delighted to welcome the staff and management of Amco to the Renew group. The acquisition of Amco allows Renew to increase and broaden the scale of its specialist engineering operations, as well as adding to the range of services we can provide to our customers. Amco has a strong and highly experienced management team and I look forward to working with them in the future.”