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Scott Wilson confirms takeover bid

Scott Wilson has told the London Stock Exchange that it has received approaches with regard to a possible acquisition of the company.

In a statement it said that the board had noted the recent movement in the company’s share price and announced that it has received approaches with regard to a possible acquisition. There can be no certainty that these approaches will result in an offer for the company, it said.

It is understood that more than one firm has made an approach.

Contractor Costain has already been linked with an acquistion of the firm and today reiterated its intent to expand into consultancy.

In March it unveiled an ambitious strategy to expand significantly in consultancy and engineering design in order to offer clients the “full life cycle” of services.Chief executive Andrew Wyllie said the expansion would be fuelled by acquistional and organic growth.

The firm currently regularly works in alliance or network with Capita Symonds, Halcrow, Land Bridge Associates, Shepherd Gilmour, but also works regularly with Scott Wilson.

Wyllie unveiled the strategy, dubbed “Choosing Costain” as he announced preliminary results for the year ended 31 December 2009 showing a record turnover of £1.1bn, a record order book of £2.6bn and a net cash balance of £121M. In 2008 the firm turned over £996M and had an order book of £2.0bn.

Today Wyllie reiterated that this remained the strategy whilst unveiling an internal restructure that will see its existing environment and community divisions amalagamated into a single enlarged division which will focus on new opportunities particularly in the water and waste markets.

“Our large customers are imposing increasingly strict criteria in selecting their preferred contractors. In particular, customers are looking for contractors capable of providing the full ‘life-cycle’ of services. This process is in turn creating significant barriers to entry. In order to succeed, it is essential that Costain has the scale and ability to deploy the resources required by such customers.

“Consequently, Costain will look to build on its current strengths - and broaden and improve the quality of earnings streams - by accelerating the development of an integrated front-end engineering consultancy, and care and maintenance operations to sit either side of our proven strength in construction,” said Wyllie.

Analysts said the potential buyer was likely to be an overseas firm making a speculative bid. Grontmij said it “could not confirm” whether it had made a bid. In January it said it was looking for acquisitions in fast growing markets such as central and eastern Europe. Scott Wilson employs over 200 staff in Poland based in offices in Warsaw, Poznań, Wrocław, Kraków and Gdańsk. The company’s activities in Poland are principally in the road, railway and environmental sectors.

Scott Wilson was ranked12th in NCE’s Consultants File 2010 with a fee income of £345M in 2009. It has £260M of work in hand and employs 5,900 staff around the world. It now generates 31% of its turnover overseas.

Scott Wilson would not comment on speculation and said a a further announcement will be made when appropriate.

Readers' comments (3)

  • gordon s crighton

    Integrating engineering consultancy with construction slims the senior management layer in the current" project management" cake and has to be welcomed but it is only a start.Futher integration should be looked at by construction also looking at absorbing some of the "project management" companies that now exist.In principal a return to the simple Client (owning the scope) and Contractor ( providing all the services) has to be the efficient way to progress.

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  • This sort of development eases the way back to an in-house integrated design and build capability and design and build, and possibly operation of works contracts where increased margins and increased design and project efficiency can go hand-in-hand. The increased margins provide a better basis for more effective across the board training of engineers in their formative years and improves any ability and opportunity to do the more expensive design and build tendering. As far as the Client is concerned, any return to a properly thought out and properly managed seamless turnkey package works strategy must have significant advantages. Separate supervisory/inspection engineers and managers that would eventually become more available will also provide proper independent "Engineer" inputs and control - again all to everyone's advantage.

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  • All very interesting, but it assumes these turnkey "contractors" will not seek to maximise their profit margins after having bid with very small margins. Market forces will only play a part until contract is awarded. After that, there is little real incentive to minimise claims due to errors/ unforeseen circumstances/ less than comprehensive brief.

    From the clients perspective (especially if the client is not an expert client) you would lose an expert advocate.

    As an article by a lawyer in the NCE a few years ago said, there is no such thing as partnering, only a contractual relationship.

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