Subject to clearance from the competition authorities, the combined group would have repairs and maintenance contracts for more than 60,000 homes and become a market leader in community regeneration and social housing services.
Both companies are owned by Cavendish Square Partners, a special purpose vehicle majority owned by private equity firm Coller Capital.
With Keepmoat’s strength in the north and Apollo’s presence in the south, the directors of both companies see the deal as a good fit - creating a group with enhanced scale and financial strength, with revenues in excess of £1bn.
The difficulties of social housing contractors facing public spending cuts have been highlighted by the recent collapse of Rok and Connaught in this sector.
Keepmoat and Apollo directors said that their enlarged group would benefit from cross selling opportunities with little geographical overlap, while delivering financial synergies. Apollo will help to strengthen Keepmoat's maintenance capabilities in the north and Keepmoat will boost Apollo's new build offering in the south.
The combined business will be headquartered in Doncaster with current Keepmoat CEO David Blunt taking up the same position in the enlarged entity and Peter Warry, currently non-executive chairman of Apollo, becoming non-executive chairman.
The new business will be branded as the 'Keepmoat family of companies' with Apollo retaining its own brand within this format. Both Keepmoat and Apollo will continue to operate as separate divisions with regional focus.
Allen Hickling will be responsible for the northern regions and Apollo CEO Dave Sheridan for the southern regions.
The remaining board members will be John Thirlwall (finance) and Peter Hindley (homes for private sale). Tom Allison, who has chaired Keepmoat for the past three years, will remain in position until the merger is complete.
Mr Blunt said: "The bringing together of these two businesses represents a compelling proposition for shareholders, customers and employees alike. In this challenging economic climate we will create a national champion in our market with substantial opportunities for growth."
Mr Sheridan added: "Operationally this deal is a very positive step forward for both companies. Together we will be able to offer our customers an unrivalled service that truly differentiates us from the competition. I am very confident in our future prospects together and look forward to reporting on our progress in due course."
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