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Takeover fever continues as global players snap up UK geotech firms

Global firms are continuing to eye up UK geotechnical companies after a series of acquisitions saw Canada's Englobe Corporation buy contractor Celtic Technologies and New Zealand's Opus International Consultants acquire consultant Joynes Pike Group.

The takeovers follow last year's acquisitions by RSK Group of STATS, and Australia's Coffey of Webber Associates. The moves are part of a growing trend that is seeing more and more medium-sized geotechnical consultants being swallowed up by bigger players.

Englobe interim president and chief executive Aline Bélanger said the firm had bought Celtic Technologies – for a fee that could rise to £9M – because it saw major growth opportunities in the brownfield land remediation sector in the UK. "We will now be better positioned to meet growing demand in the UK where housing development is a national priority," he said.

Celtic Technologies managing director Barry Ellis said: "This transaction will establish Englobe as a substantial provider of land remediation services in the UK.

"Here, the demand for housing, growing environmental concerns and regulations encouraging sustainable reuse and recycling have led to rising demand for the remediation of contaminated sites." Englobe already owns remediation contractor Biogenie, which has a growing UK base.

A spokesman for Englobe said there were major opportunities in the UK arising from the end of the Landfill Tax exemption, which will see the cost of land-filling contaminated soil soar. "Up until now it's been cost-effective for developers to dig and dump rather than bio-remediate, he said.

"There are not many organisations in a position to be able to treat contaminated land and developers are more likely to appoint organisations with a good track record. So we see a lot of potential across this market."

In another sign of the growing importance of the brownfield regeneration sector in the UK, Opus International Consultants acquired Joynes Pike in a move that increases its presence in the UK to more than 370 people in 17 offices.

Opus UK director Trevor Crawley said the firm would be looking at more acquisitions to double that number: "We have a plan to grow our presence in the UK to 700 people by 2011 and it will be difficult to do it organically because there is still a huge shortage of engineers.

"The door is pretty much open if we can find a consultant that is a good fit for us. We are not saying the UK market will not have its hiccups along the way, but there will continue to be a lot of work in the regeneration sector."

And despite the decreasing amount of cash available from the banks to finance such purchases, more acquisitions are predicted. A new "acquisition study" by Plimsoll Publishing into the "UK's 140 top geotechnical consultants and engineers" highlights 38 "extremely profitable" geotechnical consultants operating in growth markets that would make good strategic acquisitions.

The report also finds there are 86 geotechnical consultants that have built up stock reserves of cash who would be in a position to beat the credit crunch and make acquisitions. "There has never been a better time to splash the cash," said Plimsoll senior acquisition analyst David Pattison.

Consolidation in the geotechnical consulting sector is being matched in the heavy civil engineering contracting sector. Last month UK contractor Balfour Beatty acquired Dean & Dyball in a cash deal valued at £45M.

Dean & Dyball has strengthened Balfour Beatty's position in water utilities, marine and coastal engineering. The deal follows recent Balfour Beatty acquisitions of Mansell, Birse and Cowlin.

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