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City predicts Accord could be put up for sale

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CONTRACTOR ACCORD is being groomed for sale, investment analysts predicted this week, after the firm's owner asked investment bank Close Brothers to conduct a strategic review.

Accord, which specialises in highways maintenance, waste management, social housing and facilities management, is reckoned to be worth £150M£200M.

Accord has a highways management joint venture with Mouchel Parkman, working on contracts in Devon and Cornwall and London. Turnover on highways contracts last year was £135M, earning a pretax prot of £3M.

Market analyst Mike Foster, of investment broker KBC, predicted that Mouchel Parkman is a strong contender to buy.

'Mouchel Parkman's got a market capitalisation of £500M.

They have a strong balance sheet with net cash, and an operating profit of £38M. They wouldn't be breaking a sweat to buy Accord.

'Mouchel Parkman have the JV with Accord already and have signalled their desire to go into delivery as well as consulting.

The m also has housing and facilities management operations so there would be synergy with Accord.' He added that the extra earning power offered by the buoyant construction market strengthened the consultant's hand.

But support services specialist at market analyst Numis, Francesca Raleigh, said a private equity investor was a more likely buyer.

'Accord's going to be prohibitively expensive for a rm like Mouchel Parkman given the venture capital interest costs.' She said the same interest repayment issues would not be a problem for private equity investors.

'A rm like 3i will nd Accord attractive. There are long- term contracts, and long-term trends towards outsourcing of public services.

Foster said that £150M was a more realistic valuation for Accord than £200M.

The firm is owned by Stelios Stefanou, who bought it from his brother, John Doyle Contracting chief executive Stef Stafanou, in 1999. Last year turnover was £287M, and pretax prots were £6.7M.

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