Contest hots up for Amec’s building arm

A source said the two contractors were in advanced talks with Amec, while a third private equity buyer was in the frame.

The construction and civil engineering business is likely to be bundled together with other elements of Amec’s built environment portfolio, including PPP and possibly regeneration, as construction has been a loss-making business. Amec’s building facilities business is also up for sale.

Amec announced that the sale was “progressing well” at its annual meeting this week and that it had reached the second stage of bidding. One City analyst said it was likely that a trade buyer would triumph.

An Amec spokesperson declined to comment on specific companies but said there was “a mix of trade and private equity interest”. He added that the sale of all parts of Amec’s built environment would be completed by the end of this year.

There has been a mix of trade and private equity interest

Amec spokesperson

Buying parts of Amec would fit in with Morgan Sindall and Balfour Beatty’s strategies of acquiring UK companies. Balfour Beatty bought Mansell and more recently Birse, and Morgan Sindall bought parts of Gleeson’s engineering business last year.

Samir Brikho, Amec’s chief executive, said in January that it intended to sell the built environment business to focus on the energy market.

Amec reported a pre-tax loss of £109m in its 2006 results after it was hit by a £90m writedown in the construction business. Turnover rose from £2.8bn to £3.2bn in 2005.

In the a statement this week Brikho said trading in the “core businesses” was strong but that “performance is expected to be tempered by the strength of sterling”. He added: “After the programme of divestments Amec will be well positioned to take advantage of investment opportunities.” A further update will be issued before Amec’s interim results on 6 September.