Carillion selling healthcare contracts to Serco

By John Corser | Business | Published:

Carillion has agreed to sell a large part of its UK healthcare facilities management business to Serco for £47.7 million.

Carillion is selling a package of healthcare facilities management contracts to Serco

The Wolverhampton-based construction and support services group has seen is share price suffer in recent months.

It is making a major turnaround effort after booking half year losses of £1 billion, mainly due to losses on construction contracts.

A portfolio of UK healthcare facilities management contracts and associated ancillary contracts and assets which relate to 15 sites will be transferred to Serco on a phased basis.

Carillion's healthcare business is worth around £200m a year and employs around 8,000 people, mostly in maintenance, hospital portering and catering jobs.

The sell-off is part of a transformation plan that is seeing Carillion – which employs around 400 at its Wolverhampton city centre headquarters – reducing construction operations, pulling out of some Middle Eastern markets, selling off its Canadian business and trying to shore up its balance sheet.

The disposal is conditional upon the approval of Carillion’s shareholders and third party consents

The sale forms part of the group’s £300 million non-core disposals target announced as part of its strategic review in order to reduce net debt and re-focus Carillion on its core strengths and markets

Keith Cochrane, Carillion’s interim chief executive, said: “I am pleased we have been able to successfully conclude this transaction which will contribute to our efforts to reduce net debt.”


Carillion entered the public healthcare market two decades ago in response to the Public Private Partnership acute hospital redevelopment programme.

As a consequence of the reduced volume of primary PPP transactions in the sector and the scope of facilities management services becoming more limited to hard facilities management services, the Carillion board determined that the facilities management proposition of Carillion’s hospitals contracts no longer forms part of the Group’s core strategy.

Subject to identifying an appropriate purchaser prepared to offer a satisfactory purchase price, Carillion intends to seek to dispose of the remaining contracts in its UK healthcare facilities management portfolio during 2018.

The first facilities management arrangement is expected to transfer to Serco in the second quarter of 2018. Any arrangements that have not been transferred to Serco by December 13 next year, ill not transfer to Serco and Carillion will not receive the consideration allocated to those.

John Corser

By John Corser
Business Reporter - @JohnCorser_Star

Express & Star business reporter at head office, Wolverhampton. Welcomes all news of companies and business organisations.


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