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Halcrow to be bought by US programme management giant CH2M Hill

American programme management giant CH2M Hill is to buy consultant Halcrow for £124M.

The deal will see existing chief executive Peter Gammie step down. He will be replaced by CH2M Hill main board director Jacque Rast.

Staff were being informed of the deal today at 2pm. The acquisition is subject to Halcrow shareholders’ approval and the approval of the UK High Court and is expected to be completed in November.

Revealing the move exclusively to NCE, Gammie said it was a “great deal” for Halcrow. He said it was the culmination of a strategic thinking stretching back of a “number of years” and stressed it was not a response to the current state of the market.

Halcrow, along with many other consultants, has faced cashflow problems in recent times, largely due to difficulties in getting paid by Middle East clients.

Rast said the deal for CH2M Hill was a “game changer” with Halcrow’s world-class design and consultancy skills a perfect fit with CH2M Hill’s programme management and project management capability.

She said Halcrow had been identified as an ideal fit as long ago as 2008, and that CH2M Hill had moved for Scott Wilson last year only after Halcrow had said it was not for sale at that time.

Gammie said the deal was driven by growing demand from global clients for one-stop shop for services.

“There have been huge changes in our sector. There has been significant consolidation and a lot of clients are asking for a full service offering, especially when it comes to major projects and programmes,” he said.

He admitted the size and scope of the 6,000-strong firm’s offering had meant it had struggled to win work with major international clients. The combined operation will employ more than 30,000 people globally.

“When it comes to deploying the resources you need to deliver large projects we don’t all have huge numbers of staff everywhere in the world,” said Gammie.

Halcrow said it had approached CH2M Hill to take it over, having rejected an earlier approach from the American firm last year.     

“The driver for this deal is about accelerating growth. It is not about job cuts or redundancies.”

Jacque Rast

Rast said that Halcrow had been at the top of CH2M’s wish list since 2008. “We’ve worked alongside them for many years and over the last decade have teamed up and have formed partnerships. We are very complimentary in terms of geography and skill sets. This is literally a model we could not have been designed better.

Rast said she did not expect to make redundancies as a result of the deal.

“The driver for this deal is about accelerating growth. It is not about job cuts or redundancies,” she said, adding that all existing employee rights would be safeguarded.

Once the deal is approved a integration team will spend six months working out how best to unite the two firm’s operations.

Rast said she was not yet sure whether the Halcrow brand will be phased out. She said CH2M Hill recognised that there are regions and markets where the Halcrow brand is stronger.

 

 

Readers' comments (2)

Do you work for Halcrow? Or do you work with Halcrow? What is your feeling about the takeover? Let us know

  • Another famous british consultant disappears into history, along with Sir Alexander Gibb, Guy Maunsell and many others. This cannot be good for the industry, can it?

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  • Ross Roberts

    Although the loss of a name may be felt at a personal level, unless the new owners significantly reduce the quality of the work they undertake (which seems unlikely), then this isn't bad for the industry. Much worse would be to let these companies struggle on, not earning enough to sustain their high quality work, and slowly sink into oblivion. As long clients continue to demand quality, and as long as there are enough participants in the market to have true competition, then the industry will be secure.

    Given that the global construction and engineering market was worth $2,276 billion in 2010 and the biggest player (Hochtief) had revenue of $27 billion, the largest company has a 1% market share. In most industries it is considered to be an excessively fragmented market if the largest firm has less than 20% share. We've got a lot of consolidation yet to come.

    Construction may even end up consolidating like the airline industry. Today there is less choice of carriers than their used to be - but the product is significantly cheaper as a result, so more people use it and the total market has grown. There's still room in the market for iconic quality, but the consolidation at the bottom end of the market is what has really made the difference.

    Sources:
    http://enr.construction.com/toplists/InternationalContractors/001-100.asp
    http://www.businesswire.com/news/home/20110929006003/en/Research-Markets-Global-Construction-Engineering---Performance

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