Consultant sells division to Skanska so it can concentrate on higher margin design work.
Consultant Atkins has washed its hands of road maintenance contracting in the past week with sale of its highways services business to Skanska for £18M.
The move is the latest step in the consultant’s strategy of targeting higher margin design and project management work, led by chief executive Uwe Krueger.
Selling the highway maintenance division brings to an end Atkins’ 17 year association with blue collar contracting. It signals the reversal of the roads strategy led by former Atkins chief executive Keith Clarke. The strategy helped Atkins become the global company it is today.
The company won its first major local authority highway maintenance contract with Somerset County Council in 1996.
After Clarke joined Atkins from Skanska in 2002 the firm continued its focus on turnover and staff numbers, helping to accelerate Atkins to pole position in UK highway maintenance. It also helped it climb to the top of NCE’s Consultants File rankings for the next 10 years.
Skanska has effectively paid for eight existing contracts, which collectively generate around £170M of turnover annually, employing 1,250 blue and white collar staff. The eight contracts are local authority highway maintenance deals with Somerset, Bath and North East Somerset, Gloucestershire, Oxfordshire and Cambridgeshire; two regional contracts with the Highways Agency and a “homes to school” minibus fleet management service for the Royal Borough of Kingston.
Speaking to NCE this week, Atkins Highways & Transportation managing director Phil Hoare said the sale to Skanska still leaves Atkins with a roads business worth around £100M each year in fees, including the company’s interest in the Connect Plus consortium which is managing the M25.
“You will still be seeing the Atkins name in the UK roads sector, but as a design consultant and in delivery of front end work for highways projects,” said Hoare.
“The reason for selling the Atkins Highways Services business is straightforward. We are keen to focus on growth sectors, of project management and engineering consultancy, and to not have our own operational workforce, apart from on the M25 where we have maintained our interest.
“We will still be providing design support for the road maintenance sector.”
While highway maintenance contracting is no longer part of Atkins’ growth plan, the sector is still a growth area in the UK, Hoare asserts. “It’s just not for us,” he said.
Hoare said he was “delighted” that Atkins’ highways contracting business had gone to Skanska which, he said, “was culturally aligned” with Atkins.
“We are sure will they look after the staff transferring across,” Hoare said.
Skanska chief executive Mike Putnam told NCE that he didn’t expect any staff cuts to be made when the eight contracts transfer to Skanska from 1 June this year.
“While this deal has been signed and announced this week, we have been discussing it since last summer,” he said. “Atkins is divesting to focus on its core skills of consulting and it wanted to divest to a good home.
“We will be working very hard to engage with our new employees.”
The Atkins acquisition is part of Skanska’s own “profitable growth strategy”, according to Putnam.
Adding the eight contracts will double the size of Skanska’s Infrastructure Services business. It will now have an 8% share of the overall £2.4bn highway maintenance market.
Significantly, Skanska will get an instant new foothold in the local authority roads sector.
“This move may seem strange in a recession but the Skanska board is looking at long term timescales,” Putnam said.
“Projecting ahead, the acquisition will increase our presence in the highways and broader infrastructure market, strengthening our position with the Highways Agency and helping us target the local authority market.”