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Mott MacDonald hits global acquisition trail

Mott MacDonald chairman Keith Howells has heralded last week’s purchase of South African consultant PD Naidoo & Associates as the beginning of a “braver” and “more strategic” era.

The new deal to buy the 550-strong company came just nine days after Mott MacDonald snapped up 80-strong Brazilian environmental consultant Habtec.

“We’ve never stopped doing acquisitions during the recession but we did draw our breath a bit,” Howells told NCE.

In the last year the firm has restricted its takeover activity to modestly-sized businesses such as oil and gas firm Procyon, Canadian consultant Engineering Northwest and Mouchel’s oil and gas operation.

“But we’ve now started to get a bit braver and a bit more strategic,” said Howells.

The South African acquisition is one of the biggest carried out by Mott MacDonald to date and is intended to give it multi-sector access to major projects across southern Africa.

The consultant currently employs 250 people in South Africa, working largely on transport projects, many in partnership with PD Naidoo (see box).

“PD Naidoo is a springboard for us into southern Africa,” said Howells.

“Africa is touted as an up and coming place, it’s got good natural resources, there is still a lot of aid money coming in and there are enormous planned transport projects.”

The acquisitions will fill gaps in Mott MacDonald’s geographical coverage.

“PD Naidoo is a springboard for us into southern Africa”

Keith Howells, Mott MacDonald

“South America is a big gap in our geography and has been for a long time,” said Howells. “We are seeing Chile, Peru, Colombia and Brazil all opening up.

“But you can’t start in South America organically. So what we’ve bought is an environmental engineering firm that takes us straight in with the private sector and gives us time to learn the ropes.”

Howells acknowledged that there was some risk in the strategy, but he said that risk was mitigated by keeping a balance between investing in markets with high growth potential but higher risks and those with slower growth potential but lower risks.

He added that the next acquisition was likely to fit the “slow and stable model”.

This could be in Scandinavia, Turkey or the United States, he said.

“We do need a bigger presence in Scandinavia,” he said. He added that the firm’s presence today is limited to 30 staff in Norway.

“We would also like to grow Mott MacDonald Inc in the US,” he added, explaining that its 3,000-strong joint venture with Hatch currently does the bulk of its US work.

But the joint venture’s remit is limited to transport and water work and Howells would like to see its wholly-owned Mott MacDonald Inc subsidiary pick up work in buildings and energy.

Turkey is also being targeted as another country with natural resources and bold transport plans.

“I would like to do something in Turkey,” he said.

“I could see it as a place to build a sustainable business.”


Mott MacDonald and PD Naidoo explained

Mott MacDonald’s takeover of PD Naidoo will bring together the two consultants in southern Africa, creating an 800 employee business called Mott MacDonald PDNA.

The business gives Mott MacDonald a much extended, multi-sector capability in the entire sub-Sahara region. The move is subject to the approval of the Competition Commission of South Africa. It comes on the back of a working relationship built up over several years and supports both firms’ long-held growth aspirations in Africa.

Mott MacDonald and PDNA are currently working together on a range of major projects including the Eastern Cape Infrastructure joint venture. This is providing government client Transnet with engineering, procurement and construction management services for port infrastructure upgrades at Port Elizabeth, Port of Ngqura and East London.

The new practice will operate from 15 centres in South Africa, Botswana and Mozambique, providing multi-disciplinary design, implementation and management services across the property, infrastructure, transport, water, industrial, mining, energy, communications, health and education sectors.

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