CH2M and Jacobs are staying silent on reports Jacobs is in “advanced talks” with CH2M to take it over.
A report in The Times quoted an industry source who said that Jacobs is keen to make headway in the UK market and, after the takeover of Atkins by SNC Lavalin, opportunities are getting limited.
Both companies have issued similar statements.
A spokesperson for Jacobs said: “As a matter of policy, Jacobs does not comment on market rumours or speculation.”
Likewise a spokesperson for CH2M told New Civil Engineer: “We do not comment on rumours or speculation.”
Baird Equity Research director Andrew Wittmann said in his opinion, large scale mergers and acquisitions in the engineering sector often destroy, not create value.
He said: “Strategically, CH2M would fit Jacob’s tastes while bringing several high margin/lower risk project types into its mix. Still, an unquantifiable problem contract lingers, leaving possible substantial overhang potential. Large-scale mergers and acquisitions in engineering-heavy/people-focused companies have a poor track record, in our view.”
The ”unquantifiable problem contract” Wittmann is referring to is the EPC power plant associated with the Ichthys LNG project in Australia, in which CH2M has a 50% stake, and on which the CH2M JV stopped working on earlier this year.