URS bought British firm for 290p a share, up from price of 87p at start of June

Industry commentators have expressed their shock at the 拢223m price paid for Scott Wilson by its new American owner URS.

The 拢6bn-turnover engineering giant fought off a counter-bid by fellow US consultant CH2M Hill last week, securing Scott Wilson with a raised second bid of 290p a share - up from CH2M Hill鈥檚 245p bid, and massively up from the 87p price placed on the shares at the beginning of June.

Tony Williams, an analyst at 黑洞社区 Value, said the jump in value of about 233% was the highest ever for that size of company.

鈥淚t鈥檚 the biggest premium ever paid for a 拢100m-plus firm,鈥� he said. 鈥淚 thought it was an unbelievable price. Clearly they made their mind up - they wanted to buy this business.鈥�

A senior figure at a rival UK consultancy said he was initially surprised by the price paid.

He said: 鈥淕iven where I thought we were in the economic cycle it struck me as a lot of money. But my slightly more considered opinion was that there must be something pushing them into picking up this high quality organisation: if we don鈥檛 go now, someone else will.鈥�

Neither bidder was deterred by the firm鈥檚 拢63.3m pension deficit, although this is an improvement on the 拢79m liability the firm had in May 2009.

A spokesperson for Scott Wilson said the offers made by URS and CH2M Hill were 鈥渇lattering鈥�.

She said: 鈥淏oth were complimentary offers. We could not help but be flattered. They really, really wanted us.鈥�

Asked if the final price was too high, she said it reflected URS鈥� determination to acquire the firm, and said the 87p valuation was far too low: 鈥淭o be honest our whole peer group is undervalued. I definitely don鈥檛 think Scott Wilson is worth a pound.鈥�

She said the company was currently running as normal, but predicted that it would be rebranded in the future.

鈥淚鈥檓 sure in time there will have to be a transition, but nothing knee-jerk,鈥� she said. 鈥淒own the line there may be consolidations.鈥�

She added that Hugh Blackwood, Scott Wilson鈥檚 chief executive, would sit on the operational board of URS, and that the deal is expected to take about three months to finalise.

Did URS pay too much?

Kevin Cammack, analyst at Cenkos
For most people it was an eyebrow-raising price. However, firstly they were in a competitive bid situation and clearly paid a price to keep their competitor at bay. Secondly, there is a premium for going into a new market. You鈥檙e buying the individuals, clients and relationships.

Mike Allen, analyst at Panmure Gordon
In the context of the next growth cycle then probably not, but on a short-term time scale it will look expensive. URS are comfortable with the culture of the company. Absolutely Scott Wilson was undervalued at under a pound. It should have been more like 拢1.30.

Francesca Raleigh, analyst at Numis
I think it鈥檚 a high multiple reflecting the fact that a US company wanted a bridgehead into Europe. Scott Wilson was the available one, if you like. There鈥檚 a shortage of available businesses in play. The buyers of Scott Wilson seem to be comfortable with the pension fund deficit.

Tony Williams, analyst at 黑洞社区 Value
The short answer is yes. Normally you鈥檇 pay 50% of turnover in bad times and 100% in good times. They paid about 70%.
In the short term it will be value diluting, but in the long term it will create value.

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