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Apollo and Keepmoat unveil plan for joint venture

Apollo and Keepmoat are set to merge in a bid to become a £1 billion market leading social housing and regeneration contractor.

Keepmoat chief executive David Blunt and Apollo chief Dave Sheridan (pictured) said the two “complementary businesses” will create a group with enhanced scale and financial strength, a wider product range and stronger long term partnerships with suppliers.

Apollo will retain its brand but become part of the Keepmoat “family of companies”.

The move could complete in the last quarter of this year, subject to clearance from the Office of Fair Trading (OFT).

Keepmoat, with an HQ in Doncaster and 3,000 staff, will report revenue of £682 million in the year to March 2011. Apollo, with 1,000 staff and an HQ in Essex, is set to report a turnover of £367m. Neither company have posted their annual results for 2010/11.

In 2009/10, Keepmoat reported a £604m turnover, pre-tax profit of £68.8m and operating profit of £48.9m. Apollo reported a £346m turnover and £10.3m pre-tax.

Apollo Group Holdings reported revenue of £299m and an £8.4m loss.

The aim is for Apollo to strengthen Keepmoat’s maintenance capabilities in the north, while Keepmoat - which has just won a place on the Government’s £1.8bn Affordable Homes Programme - will boost Apollo’s new build in the south.

The companies will operate as separate divisions with regional focus. Mr Sheridan will head up the southern region, while Mr Blunt will become overall chief executive.

Both men told CN that with minimal cross over, staff will not need to worry about the move.

“I don’t really envisage much of a movement with personnel in terms of numbers at all”, said Mr Blunt. He described the merger as an “opportunity to grow both businesses”.

Both chiefs insisted that neither company will benefit more than the other from the move and that it will be “business as usual”. Mr Blunt said it will create a “national champion in our market with substantial opportunities for growth.” He said that together the firms will be better positioned to secure and continue private partnerships.

Mr Sheridan said the merger provides an “unrivalled service that truly differentiates us from the competition.” He told CN that the sheer scale of the organisation, its integrated offering, along with a pool of resource, skills and experience will mean it can deliver a wider range of services that can help ease budget pressures on clients.

Mr Blunt said the companies are now building up the business plan, but that it is a “little premature to talk about goals and numbers at this stage.”

Apollo will continue with its growth strategy, while benefitting from having stronger reference sites in terms of new build, said Mr Sheridan. Recent acquisitions have included M&E firm Goldhill and FWA West.

The companies have been part of the same investment portfolio since 2007, with rumours of a merger circulating for some time.

A spokesman said the timing comes after more certainty following the handover of the portfolio from HBOS to Cavendish last year and as the companies see a number of growth opportunities in the market which a business with increased scale can take advantage of.

Just last month Apollo launched a retrofit division, while its social housing new build division is just over a year old. Recent contract wins have included a £22m Welsh housing contract and a £27m Ipswich housing contract.

Apollo and Keepmoat are among several contractors that have won places on a solar framework worth up to £225m over four years.

Keepmoat has been named by The Homes and Communities Agency on its winning £1.8 billion Affordable Homes Programme.

It also recently won a place on the £225m joint retrofit arrangement between Fusion 21 and Procurement for Housing as well as Bedfordshire Pilgrims Housing Association’s £300m design and build framework.

The new board will see:
David Blunt as CEO.
Peter Warry - current non executive chairman of Apollo - become non executive chairman of the group.
Allen Hickling head up the northern regions.
Dave Sheridan head up the southern region.
John Thirlwall head up finance, with Peter Hindley on homes for private sale.
Tom Allison, Keepmoat chairman, will leave the position once the merger is complete.