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Amey's £385M Enterprise buy moves it into utilities

Newly merged business to invest in engineering graduates and apprentices.

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Ewell: To lead new £2.3bn tunrover business after merger

Amey is to almost double in size and become one of UK construction’s biggest graduate employers after its parent, Ferrovial, last week agreed to buy utilities contractor Enterprise for £385M.

Integrating £1.1bn turnover Enterprise and its 9,600 staff into Amey will almost double the size of the firm, creating a company with a turnover of £2.3bn employing around 21,000 people.

The firm will also be seeking to invest heavily in graduates and apprentices after the deal is completed in April.

Amey chief executive Mel Ewell will head the new business. He said he would continue to honour his firm’s commitment to skills development.

Amey aims to ensure that 3% of its staff are graduates and apprentices. It currently has around 200 apprentices and 150 graduates working towards some form of professional qualification. Ewell said that kind of investment would have to continue as engineering and asset management skills are transferred to new markets and clients.

“Bearing in mind the size of the company we are going to be, I am going to be very interested in talent development,” said Ewell. “Probably the most important thing for me will be developing the skills and competencies we’re going to need.

“That means continuing to invest in vital engineering skills and that is something this industry is crying out for,” he said.

“Transport is still our biggest and most important sector, but the utilities sector is alongside it and the skills are transferrable”

Mel Ewell, Amey

Ewell said the acquisition is a good strategic fit and makes Amey a “much more balanced” operation. Around 80% of Amey’s turnover comes from the highway maintenance and rail sectors. The Enterprise deal allows it to diversify into other markets, particularly utilities and defence. Around 50% of Enterprise’s business is with utilities. Another 25% is in waste collection and the rest is split between defence, social housing and highways.

After the merger, only 40% of of the new organisation’s turnover will come from roads and rail, while around 20% will be from utilities, which Ewell sees as a major growth sector.

“We think it’s a £19bn market. We already have an opportunity pipeline [work the firm is seeking to bid for] of £9bn through Enterprise, and our view is that is going to grow by up to 7% a year,” he said.

The deal excludes Enterprise’s interest in the EnterpriseMouchel highways maintenance joint venture (JV), which has been sold to Mouchel (see box).

But Ewell stressed that Amey was not diversifying away from highway maintenance.

“This is absolutely in no way a sign from us of diminishing interest in that sector,” he said. “If you look at that JV, Enterprise needed Mouchel’s engineering capability and Mouchel needed Enterprise’s operating capability.

“Since we bought Owen Williams we have brought that capability in-house and now what we deliver is an end-to-end service,” he said.

“We have 2,500 of our own design engineers who work hand in hand with delivery teams to drive out costs.

“This is us being very clear that the end-to-end capability we’ve got is unique and, more to the point, as we go into the utility sector, we can really start to add value to that.”

Ewell stressed that 60% of the combined operation’s business will now be in roads, rail and utilities and that Amey’s whole life asset management skills can be used in all three sectors.

“The most exciting thing to me is the opportunity to develop skills across the piece. When you look at the new balance, transport is still our biggest and most important sector, but the utilities sector is alongside it and the skills are transferrable.

“These are all sectors with an absolute focus on enhancing the asset and where the key thing is ‘don’t disrupt the network’. They have a clear need for a whole life asset approach and to bring that you need the right skills,” he said. “We will be bringing those in.”

 

Mouchel acquisition

Mouchel has acquired Enterprise’s 50% shareholding in highway maintenance joint venture EnterpriseMouchel.

The name and branding will remain unchanged but will be reviewed in due course and any changes will be communicated at that time.

“Over the next few months Enterprise and Mouchel will work together to ensure a smooth transition following the share ownership change,” said Mouchel.

Among EnterpriseMouchel’s big wins recently was an area based highway maintenance contract awarded by Transport for London in November. EnterpriseMouchel picked up one of four new area-based deals on offer. Amey missed out.

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