Planned 拢2.3bn acquisition of the US engineering firm sees Aecom overtake Atkins by head count
Aecom鈥檚 planned $4bn (拢2.3bn) acquisition of fellow US engineering giant URS will see it overtake Atkins as the UK鈥檚 largest consultant by head count, with 11,028 staff.
The deal, announced this week, will create a combined global company with $19bn (拢11.1bn) revenue and more than 95,000 employees.
News of the deal came in the same week as Galliford Try announced it had acquired Miller鈥檚 拢410m-turnover construction business in a 拢16.6m deal, with Miller offloading the loss-making division to pave the way for the flotation of its housebuilding business (see pages box below).
In the UK, the Aecom-URS deal will combine Aecom, with 4,016 staff and 拢430m turnover, with its bigger rival URS, with 7,012 staff and 拢489.7m revenue.
This will enable Aecom to leapfrog rival consultants Atkins (9,374 staff), Jacobs (8,274 staff) and Mott MacDonald (5,398 staff) to become the UK鈥檚 largest consultant by headcount.
Aecom will be the second largest consultant in the UK by revenue, with 拢919.7m revenue, just shy of Atkins鈥� 拢967.7m revenue.
All headcount and revenue figures are taken from 黑洞社区鈥檚 Top 200 Consultants 2013 league table.
Richard Steer, chair of Gleeds Worldwide, said the merger was part of a continued trend towards 鈥減olarisation鈥� in the size of firms in the consultancy market that would make it increasingly difficult for medium-sized firms to win work, although he said the deal would have a 鈥渘egligible鈥� effect on project management and quantity surveying given URS鈥� small capability in those markets.
Steer said he doubted many clients would find the offer of a combined design and cost management service attractive. 鈥淲e firmly believe that clients looking for time and cost advice need to employ consultants that are separate to the design team,鈥� he said.
Both Aecom and URS have a significant UK presence, after Aecom acquired UK-based consultant Davis Langdon and URS acquired UK-based consultant Scott Wilson, both in 2010.
Martin Koffel, chairman and chief executive of URS, told analysts this week there would be no 鈥渟hock effect鈥� for staff in integrating the two companies as both firms had been through many mergers and acquisitions and had the 鈥渃ultural mind set that can work with it鈥�.
Aecom and URS, both based in California, expect to close the deal in October.
Aecom targets new global markets with 拢2.3bn URS deal
Acquisition of fellow US engineering giant signals move into oil, gas, nuclear and industrial sectors
Aecom is acquiring URS to expand in the global oil and gas, power, and government services sectors, the firm鈥檚 boss said this week.
Mike Burke, Aecom chief executive and chairman, announced the planned $4bn (拢2.3bn) acquisition of fellow US engineering giant URS this week. He told analysts that Aecom鈥檚 primary goal would be to 鈥渃ross-sell鈥� URS鈥� US expertise in the booming oil, gas, power, nuclear and industrial sectors where Aecom previously had little foothold.
Burke said the deal, which will create a combined global company with $19bn (拢11.1bn) revenue and more than 95,000 employees, would help Aecom 鈥渁chieve our vision to become the premier fully-integrated infrastructure firm in the world鈥�.
The firms expect to achieve $250m (拢146m) in 鈥渁nnual cost saving synergies鈥�, nearly all of which will be achieved by the end of the 2016 financial year, with detail on where savings will be achieved to be provided at a later date.
Burke said: 鈥淢ore than half of [URS鈥橾 business is entirely complementary to ours, and in markets or services that we do not provide today.
鈥淲e fully expect to be able to utilise the deep expertise of URS in energy, power and industrial [work]to be able to deliver that through our global platform.鈥�
The URS and Aecom government services businesses will combine to form one business.
Burke said he expects to lead the combined firm after the transaction closes. Two URS board members will be elected to the Aecom board.
In the UK, Burke said URS provides design services that are 鈥渄ifferent to the type we provide today鈥�.
URS鈥� UK business is more heavily weighted towards engineering, while Aecom has a much higher proportion of quantity surveyors and project managers (see chart).
Aecom declined to comment on the deal鈥檚 implication for the two firms鈥� respective UK leadership teams as 黑洞社区 went to press on Wednesday (16 July), but Steve Morriss, existing chief executive in Europe, the Middle East and Africa, said the deal was 鈥渁n exciting one for both companies鈥�.
鈥淢any of our clients are asking for a broader range of services across an increasing number of locations, and the combination of skills and talent that upon completion we will be able to provide will ensure we have the strength and breadth to meet their needs,鈥� he said.
Aecom proposes to buy the entire URS stock and is offering $56.31 (拢32.88) per URS share in a cash and share transfer deal, broken down into $33 (拢19.27) in cash and 0.734 Aecom shares for every URS share.
Under the deal the combined firm will be 65% owned by Aecom shareholders and 35% owned by URS shareholders.
The level of debt of the combined firm at $5.2bn (拢3bn) concerned credit watchdogs, with Standard & Poor announcing that a downgrade of Aecom鈥檚 credit rating 鈥渋s likely鈥�, while Moody鈥檚 placed URS鈥� credit rating under review for downgrade.
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