The infrastructure group, which is £100m in debt, is in talks with Swedish contractor Skanska, but a senior City source said it had also been asking corporate financiers which UK firms might be interested in buying the stake.
City speculation about a potential UK suitor for Costain has so far focused on Mowlem, Miller Group, Kier and Tilbury Douglas.
“Intria is under all sorts of pressure to dispose of its stake and is getting impatient with Skanska,” said the source. “It is scratching around for another buyer to come in and thwart the Swedes.” Under stock exchange rules, any company that acquired a 37% holding would be obliged to launch a formal bid for Costain.
Skanska holds a 7.6% stake in Costain and has an option to buy up to 40% of the firm at a set price. This agreement expires in November 2000.
Skanska has made it clear that it wants to buy a UK contractor but analysts are not convinced that it wants a controlling stake in Costain. “I got the impression Skanska was very happy to keep using Costain as a way to win work in joint ventures,” said one.
Intria is scratching around for a buyer to come in and thwart the Swedes
City Source
Costain recently returned to profit after several years of heavy losses. Chief executive John Armitt was headhunted from Laing in 1997 to turn the group’s fortunes around.
He has led a cost-cutting drive that saw the departure of construction and civil engineering managing director Stuart Atkinson last month.
City views are mixed on Costain’s prospects of ever becoming a major force in construction again. “It still has a great brand name and bloody good engineering and international businesses,” said one source.
But another said: “I think you would have to be mad to buy them.” Other possible bidders could be Costain’s other large shareholders, apart from Skanska and Intria. They are Middle Eastern construction firm Kharafi, which has a 19.7% stake, and Raymond, a contractor based in Bahrain and Saudi Arabia, which owns 7.6% of the shares.
