Last checked at (Sharecast News) - Infrastructure engineering services company Renew announced on Tuesday that its wholly-owned subsidiary QTS Group has acquired Rail Electrification (REL), for a total cash consideration of up to £5.3m.
The AIM-traded firm described the Scotland-based REL as a "leading provider" of road rail plant and services associated with the installation and commissioning of overhead line electrification in both the light and heavy rail infrastructure sectors across the UK.
It said REL would bring "highly complementary" capabilities to Renew's existing rail offering, and would enable the company to further capitalise on the planned increased level of investment by Network Rail into rail electrification.
The acquisition would "strengthen and expand" the firm's existing multidisciplinary maintenance and renewals engineering service it provides across the rail network.
As part of the UK Government's commitment to delivering a carbon-neutral rail network by 2040 for England and Wales and by 2035 for Scotland, it was estimated that there would be around 15,000 single track kilometres of new electrification carried out across Network Rail's controlled infrastructure over the period.
The company said the recently-released Williams Rail Review stated that electrification would likely be the main way of decarbonising the rail network.
Renew said initial consideration for the acquisition was £3.0m in cash, with further deferred cash payments of up to £2.3m payable between now and September 2024, conditional on the achievement of certain targets.
The consideration was funded from Renew's existing cash resources.
"The rail network has a crucial part to play in supporting the UK's commitment to 'net zero 2050' and this acquisition will help enable Renew to play a bigger part in Britain's green economic recovery," said chief executive officer Paul Scott.
"REL is a highly regarded business with a strong track record and will enable us to broaden our service offering within our rail business."
Scott said the company's existing multidisciplinary rail capability, complemented by the electrification expertise of REL, would leave Renew "ideally positioned" to play a role in delivering a decarbonised railway.
"Rail electrification offers attractive long term structural growth opportunities underpinned by highly visible committed regulatory spend in a sector that we know extremely well."
At 0910 BST, shares in Renew Holdings were up 1.26% at 644p.
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