SWEDISH CONSTRUCTION giant Skanska last week sold its 50% stake in Costain at a loss so the two contractors could end an agreement to share work on major UK projects.
Skanska wanted to close the agreement to time with the completion of its takeover of UK based Kvaerner Construction.
This was finalised last week.
Kvaerner's construction businesses and projects are being rebranded with the Skanska logo.
Skanska bought a 7.6% stake in Costain in 1997 on the understanding that if the British contractor won projects worth over £20M, it would share the workload.
But there was also an agreement that Skanska would share 50% of any UK work worth more than £20M won with Costain.
This, it was felt, would have been unworkable following the Kvaerner acquisition. Kvaerner's UK civil engineering turnover was £387M compared with Costain's £130M.
Skanska said it had decided to sell the Costain stake at a £2M loss because it had acquired a much bigger presence in the UK construction market via Kvaerner. It sold its shares to existing Costain shareholders Mohammed Abdulmohsin AlKharafi and Raymond International.
Costain chief executive John Armitt said the Skanska tie up had helped stabilise Costain which was in financial difficulties in the mid 1990s. But he said Costain was now strong enough to bid for major projects worth up to £50M on its own. It recently won the £200M contract to rebuild Kings Cross Underground station in joint venture with Taylor Woodrow.