Morgan Sindall buys Connaught arm for £28m

10th Sep 2010 07:36

Morgan Sindall, the construction group, has snapped up most of the contracts and assets of the social housing division of beleaguered building group Connaught.The deal will secure the future of about 2,500 workers in that business though prospects for those employed in other parts of the company remain uncertain. In total, Connaught employed around 10,000 people.Morgan Sindall bought the social maintenance business from the administrator KPMG late on Thursday evening, paying £28m. Revenues for the business were about £300m annually.KPMG is also the administrator to Connaught Partnerships, the social housing division, and Connaught Technical Solutions, but the company's compliance and environmental businesses are not in administration and may be next to be sold, though these are said to be trading satisfactorily. The company came under pressure after a profits warning in June blamed on public spending cuts as councils deferred projects. Following that, suppliers demanded payment earlier as concerns over its finances mounted, which squeezed its cashflow.Roy Gardner, who joined as chairman in May, launched an independent investigation into its accounting practices in July. Connaught eventually failed after its banks refused to back a rescue business plan proposed by Gardner.