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Carillion-Mowlem merger to create third mega-contractor

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CONTRACTOR CARILLION last week confi rmed that it was considering buying Mowlem, in a deal that would create Britain's third multi-billion pound contractor.

Last year, Carillion generated a turnover of £1.99bn and Mowlem £2.1bn. The only two contractors generating more were Balfour Beatty with £4.2bn and Amec with £4.8bn.

Mowlem said that a preliminary approach had been made to the company at the end of October, prompting speculation about the identity of the mystery bidder.

Carillion also confirmed that it was considering making an offer. A merger could liminate cost duplications in sectors where the two companies overlap. These include road, rail, health, building and PFI.

It would also enable Carillion to broaden into environmental work, and mechanical and electrical contracting through Mowlem's engineering and environmental services divisions.

Both companies operate internationally, but in different countries.

Mowlem's share price has risen after it decided to write off several contract losses over the past year. This week, shares were trading at 190p compared to 129p earlier this year.

It recently announced a £73M write-off to account for losses on ongoing projects (NCE 3 November).

Mowlem is also restructuring its construction services division and has set up a new central risk management team to improve its risk assessments and strengthen bid review processes.

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