Mears surges as it agrees TerraQuest sale for up to £72m

Mears shares shot higher on Friday after it agreed to sell its Birmingham-based business, TerraQuest, and its subsidiaries, for up to £72m, to funds advised by private equity group Apse Capital.

The consideration comprises minimum cash proceeds of £61.8m, up to a further £5m in cash subject to the performance to the end of December 2021, and £3.2m in interest bearing loan notes.

The company said that following the disposal, it will be solely focused on its core proposition as a provider of specialist housing solutions to central and local government. It will also have a "significantly" strengthened balance sheet.

Chief executive officer David Miles said: "TerraQuest has been a great success story within the Mears Group. Through the provision of both financial and intellectual capital we have created a leading digital and technical services provider to the planning, infrastructure and property sectors across the UK.

"This transaction secures the next stage of TerraQuest's development and allows Mears shareholders to realise significant value from this investment."

Mears also said in the statement that trading since the end of June has been in line with its expectations.

"The board keeps under close review the changing Covid-19 backdrop. Mears continues to benefit from the supportive financial arrangements agreed with clients through the first half of this year. Given this, and the relative proximity of the year end, the board expects that the recently implemented England-wide lockdown restrictions and the restrictions in Scotland will not have a materially adverse impact on performance in 2020."

At 1040 GMT, the shares were up 24% at 149p.