* To pay 118.79 pence per Eaga share
* Eaga shareholders to get 1.21 pence interim dividend
* Carillion sees deal adding to earnings immediately
* Carillion shares up 0.7 pct
* Eaga up 30.7 percent, trades above offer price
(Adds analyst comment; detail, background)
By Adveith Nair
LONDON, Feb 11 British builder Carillion
(CLLN.L) has agreed to buy energy-saving scheme operator Eaga
EAGA.L for 306.5 million pounds ($494 million) to enter the
high-growth energy efficiency market.
Carillion, a building and support services firm, generates
much of its revenue from government work, which is under threat
from spending cuts, and public private partnership projects.
"We identified energy management and low carbon services as a
huge, key growth area," Carillion Chief Executive John McDonough
told Reuters. "The market that Eaga addresses is very large and
will grow significantly over the coming years."
European construction groups are seeking more profitable
activities outside their core businesses as heavily indebted
governments cut infrastructure spending. [ID: nLDE70U139]
Eaga installs energy-saving products such as insulation in
homes under government schemes.
Carillion will pay Eaga 118.79 pence per share, a 29
percent premium to Eaga's closing price on Thursday and 49
percent above its price on Feb. 2 when the offer was first made
Eaga shareholders will also get an interim dividend of 1.21
pence, for a total offer price of 120 pence, Carillion said.
Eaga shares, which had lost more than 40 percent of their
value over the past year, were up 30.7 percent at 1221 GMT to
120.03. The stock rose marginally above the offer price and
touched its highest level since June.
Peel Hunt analysts said the offer price was "slightly ahead"
of their fair value range of 90-106 pence per share.
"We see the logic in the transaction, but note that it
dilutes the international earnings profile," Peel Hunt said in a
note. "At first glance, we estimate the transaction will be
around 8 percent enhancing in the first full year."
Carillion sees cost synergies of 9 million pounds by the end
of 2013 and expects the deal to add to earnings immediately.
"Carillion has a good track record when it comes to
integrating acquisitions giving us confidence in management's
view over synergy benefits," analysts at Seymour Pierce said.
Carillion shares were up 0.7 percent at 388 pence.
The deal came two weeks after Eaga, which has been hit by
government spending cuts, posted first-half results below market
"We believe shareholders are unlikely to receive a better
offer for their shares," analysts at Canaccord Genuity said.
Separately on Friday, Zenergy Power ZEN.L, which makes
specialised wires and coils for the renewable-energy sector
using superconductor technology, said it was looking for a
(Reporting by Adveith Nair; Editing by Rhys Jones and Erica
($1 = 0.6206 pound)