Consultant hunts for alternatives as Sweett鈥檚 拢5.4m Chinese deal wrecks takeover talks

Capita Symonds pulled out of takeover talks with Cyril Sweett several weeks ago after the latter鈥檚 拢5.4m acquisition of Chinese firm Widnell, 黑洞社区 can reveal.

It is understood that Capita and Cyril Sweett had begun preliminary negotiations for a deal as part of Capita鈥檚 plans to boost its project management and QS capability.

A source close to the process said Cyril Sweett鈥檚 increased exposure to the Chinese market after the Widnell deal in July had put Capita off the takeover.

The source said: 鈥淭here had been exploratory talks. When the Widnell deal went through Capita lost interest despite the fact more meetings were in the diary. Suddenly having 400 people in China required a whole lot more due diligence.鈥�

The UK consultancy sector is going through a period of consolidation after Aecom鈥檚 拢204m takeover of Davis Langdon last month and the 拢223m acquisition of Scott Wilson by URS in July. A source close to Capita said the company planned more corporate activity this year.

The source said Capita was looking for 鈥渁 project manager that is making money鈥�, adding: 鈥淚t would have had a good look at Davis Langdon had it got in early enough before Aecom.鈥�

If the deal had gone ahead, Cyril Sweett would have delisted from the stock market, where it has found life tough since floating in October 2007. The group鈥檚 share price has dropped from a high of 122.8p to a low of 23p in May this year, and its market value has fallen from 拢80m to about 拢20m.

A source close to Cyril Sweett said: 鈥淭here have been times when the directors have been upset at where the share price was so I wouldn鈥檛 be at all surprised if they talked to private companies about exiting the stock market. They are proud of the brand and have taken it overseas as UK work has dried up, but they are quite pragmatic.鈥�

In the year to 31 March 2010 Cyril Sweett turned over 拢65.6m and made 拢2.1m in pre-tax profit; Capita Symonds turned over 拢272.2m and made a profit of 拢26.5 in 2009.

Capita declined to comment on the reports. Dean Webster, chief executive of Cyril Sweett, said: 鈥淚t鈥檚 pure speculation. We鈥檙e consolidating and have demonstrated that through the acquisition of Padghams and Widnell and we have the funds to continue to do so.鈥�

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