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Amey value slashed as sale looms

3135724 amey

The value of Amey has been slashed by £660M, as parent company Ferrovial considers selling the UK services firm.

In a statement made to the Spanish stock exchange, Ferrovial said it had given Amey a “fair value” of just £88M. In its last financial update released in May 2018, Amey was valued at £748M.

New Civil Engineer understands that the sharp drop in the valuation has prompted other consultants to take a look at the firm with a view to making a bid.

It comes four months after Ferrovial first announced that it was looking at the possibility of offloading its services division. 

Ferrovial said the write down was largely due to Amey’s row with Birmingham City Council involving a £2.7bn highway maintenance PFI contract. The local authority and Amey are involved in a legal dispute about the quality of work carried out so far under the 25-year contract.

Alongside the Birmingham contract, Amey has run into problems with Sheffield residents over its £2.2bn PFI highway maintenance contract with the city. The deal included a controversial tree felling programme. 

A recent Local Government and Social Care Ombudsman (LGO) report has concluded that Amey, which was working for Sheffield City Council, “misrepresented expert evidence” concerning the contested removal of an alder tree in Totley. 

The council said it would act on the report and see whether lessons could be learnt. Amey deferred to the council’s comment when contacted.

“Amey’s fair value has been affected by the development and outlook of the UK market, which has been impacted by macroeconomic uncertainties and low public budgets,” a spokesperson for Amey said.

“Against this backdrop, the number of contractual disputes in the market has increased significantly. In Amey´s case this has been focused on the operating service contract in the PFI with the Birmingham City Council.”

The decision has been taken inline with Ferrovial’s strategy to focus on the development of its infrastructure business. According to most analysts’ valuations, infrastructure weighs more than 80% in the sum-of-the-parts of Ferrovial.

  •  Another problematic PFI project finally came to a close in February when the 58km Aberdeen Western Peripheral Route opened in full. The project cost at least £1bn in total and the collapse of Carillion, which was building the road in joint venture with Balfour Beatty and Galliford Try, resulted in millions of pounds of extra costs for the two remaining contractors.

 

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