Contractor pulls out of bidding for Belfast schools as it emerges parent company may sell the business

Morrison, the contractor and services company, has pulled out of the race for a £500m schools programme in Belfast, in the same week that it emerged that AWG, its parent company, was gearing up to sell the business.

Morrison had made it onto a shortlist of three for the £120m first phase of a project that involves a total of 83 schools. The other two firms were Amey and Bilfinger Berger.

A spokesperson for AWG confirmed that it had pulled out of the scheme, saying it was part of a wider decision to avoid projects that were purely facilities management provision with no construction.

He said: “We are focusing our FM resources on UK local authority repair and maintenance work.”

AWG has also appointed the corporate finance team at Close Brothers to look at possible options for Morrison. The most likely outcome of the review is a sale of the construction business, which is valued at about £200m.

AWG and Morrison have had an unhappy union from the outset. When AWG bought the contractor for £263m in 2000, the latter was forecast to make a £31m profit for the year to 31 March. However, it made a £46m loss and AWG started legal proceedings against the company’s founder Sir Fraser Morrison and former chief operating officer Stephen McBrierty, claiming they had fraudulently misrepresented the books.

Jonson Cox, AWG chief executive, is thought to have succumbed to shareholder pressure to sell the business, which is not core to AWG.

The spokesperson said: “No decision has been made,” adding that the options included a sale, a demerger of Morrison or no change.

Francesca Raleigh, support services analyst at investment bank Numis, said: “People will be interested in parts of Morrison but nobody is likely to want it whole.”

Balfour Beatty this week said it was “considering making an offer” for Mowlem, despite the fact that the latter’s board has backed a £291m offer from Carillion.

Balfour, the UK’s largest contractor, emerged on Monday as the second company to have approached Mowlem, although it said: “There is no certainty that an offer will be forthcoming.”

Although Carillion’s bid of 205p a share in cash and shares has been recommended, analysts this week said an offer from Balfour could be more attractive. Any offer from Balfour is likely to be about 218p or more. The contractor would also be in a position to make an all-cash offer.