The purchase of Canadian engineering design group Agra will catapult Amec into the top three engineering design and construction groups in the world, behind US firms Bechtel and Fluor Daniel.
The deal will mean that half of the combined company’s £3.8bn turnover will be outside the UK.
At a press conference on Wednesday, Amec chief executive Peter Mason said the merger was a natural progression in the firm’s move out of the traditional building market. “We are going to do less and less pure building in the UK, as we have demonstrated over the past year and a half,” he said.
Agra has an annual turnover of £3.4bn. It employs 6500 people in 24 countries, although most of its business is done in North America.
It carries out project management and design consultancy, with most of its revenue derived from its engineering business. This serves the petrochemicals and power industries.
Agra does C$350m (£150m) of construction work every year, mainly on pipelines and foundations. Its UK project management business, which carries out about £80m of work a year, will be integrated into Amec’s capital projects division.
Analysts say Amec expects to save £12m as a result of the merger by combining management functions and using Agra’s project management software throughout the business.
Mason said job losses as a result of the merger would be “very limited indeed”. However, the move will lead to a shake-up at Morse Diesel, the company’s faltering US business.
President and chief executive of Agra, Peter Janson, will join the Amec board with responsibility for all of its operations in the Americas. He is expected to move Morse Diesel away from its commercial building markets into higher-margin industrial work.
Alastair Stewart, analyst at Robert Flemings Securities, predicted that other top tier contractors would also start buying consultants.
Some in the City felt that Amec had paid too much for the firm – Amec’s share price was down 2p to 210p on Wednesday this week.
