The possibility of the first hostile takeover in living memory of one contractor by another has sent shockwaves through the sector over the past week.
However, things have calmed down a good deal since Friday, when speculation peaked that Carillion would force through a deal for rival Alfred McAlpine following its offer of 570p a share.
As we explore on page 10, there is an obvious reason for this: the large number of shareholders that own stakes in both companies. As a result, it is likely that a deal will be done without the need to go hostile as it is in the shareholders’ interests not to force up the price of McAlpine.
This may be bad news for brokers and journalists eager for a bloody takeover battle, but it is good for the industry at large. Here’s why. First, it may be an awful phrase but “partnering” is what contractors now have to do best. In this context, a hostile battle between two of the sector’s biggest players would run counter to this and ultimately serve nobody’s interests.
Second, an agreed deal would bring to an end the issue of what to do with McAlpine. Ever since the company announced it would be splitting, the “for sale” sign has dangled over its headquarters.
Shareholders who don’t own stock in both firms may point out that a split would release more value, but a sale would at least give some certainty to McAlpine’s workforce.
Third, City confidence in the ability of the firms to run themselves took a knock when Carillion revealed that it had to make a writedown of £135m after its 2006 takeover of Mowlem. This provides the perfect opportunity to put the record straight.
Purists may argue that a deal, so soon after Morgan Sindall bought Amec’s construction business, would further diminish competition. They may have a point, but it could also be argued that the rise of Carillion as a clear number two behind Balfour Beatty in the contracting league would give clients the choice they crave in bidders for the ever larger deals we are seeing.
Cometh the hour, cometh the man
The regeneration sector is buzzing with speculation that Sir Robert Kerslake, Sheffield council’s chief executive, is about to be unveiled as Gordon Brown’s “Mr Housing” . If Kerslake is the man to head the Housing and Communities Agency (HACA) and deliver the prime minister’s pledge of building 3 million homes by 2020, Brown could have done worse. Kerslake’s profile outside the regeneration community may be low, but he has led a quiet revolution in Sheffield. Encouragingly, he has recently talked of how a client “needs to be clear what it wants, and be sensible and pragmatic”. Given that the HACA will command an £8bn budget until 2011, the construction industry should be as eager to prise Kerslake away from his beloved Sheffield as Brown.