Support services giant Amec has sold its French engineering arm Spie to a private equity group for more than £700m.

Under the deal, announced on Monday, PAI Partners will pay Amec £707m for the firm, which specialises in the energy and rail sectors.

News of the deal prompted an initial share price rise at opening of trading on Monday. Share then fell to 345.5p by the time the market closed, 6% down on the day, reflecting a general fall in equities on Monday.

Spie employs 23,000 staff in 380 offices across Europe, and last year posted pre-tax profit of £49.7m on turnover of £1.8bn.

The disposal of the French engineer, which also contributed £75m to Amec's £118m pre-tax profit in 2004, is part of a three-pronged strategy by Sir Peter Mason, Amec's chief executive, to reduce the support services company's debt and make it more profitable. The deal is expected to make an exceptional profit of £220m. The company reported £70m of losses on contracts last November.

Mason, who could retire as early as September, wants to break off the energy and nuclear parts of the business, leaving Amec's PPP contracts and infrastructure jobs in a separate business run by current director John Early.

A successor to Mason to run the energy business, which will retain the Amec name, has not yet been appointed.

We consider the company to have excellent growth prospects and to be a strong platform for acquisitions

Bertrand Meunier, senior partner, PAI

Mason said that Amec intended to return some cash from the Spie deal to shareholders, but the amount would depend on the needs of the two remaining businesses.

Mason said: "We are extremely pleased to announce this important first step in our strategic restructuring. We are delighted to have secured a timely transaction at a very good price and with a shareholder who will continue to support Spie's plans to invest in and develop the business".

Bertrand Meunier, PAI senior partner, said: "We are very pleased to have agreed on the terms of the acquisition. We consider the company to have excellent growth prospects and to be a strong platform for acquisitions."

The news means that Jean Monville, chairman of Amec Spie and a director of Amec, will resign from the board to concentrate on running Spie under its new owners.

The firm said: "Amec continues to work on the separation of its continuing operations into two entities and will provide a further update on or before the publication of our interim results for the six months ending 30 June 2006, which is expected to be on 31 August 2006."