What do you do if you’ve fallen out of favour with the City and your share price is heading south?
Well for Amec, and now Alfred McAlpine, the answer is to undergo a root-and-branch transformation. Amec’s strategy has been to adopt a new identity as an energy firm and hold a boot sale for the businesses that don’t fit – the final deal was completed this week. This at least has the advantage of clarity, and it provides a coherent base for the firm to rebuild itself. McAlpine’s strategy is far less lucid; in fact, it’s hard to see where it goes from here.
The idea is to sell the PFI arm, which will raise some ready cash, and the disastrous slate division, which was always a bit of an odd man out. What’s left will then be split into two. The facilities management business has a good reputation and could find itself being bought by a private equity firm. That would leave a rump infrastructure and building services division, and that is not such a good platform from which to rebuild; historically, struggling mid-sized building firms have not been the darlings of the stock market.
That said, the announcement of the break-up has already bumped up the firm’s value, so as a short-term strategy it has worked. In that sense, it’s difficult to argue that it’s the wrong move – just a rather desperate recourse for a company that has suffered too many knocks over the past five years and has run out of ideas. The management, headed by Ian Grice, certainly doesn’t come out of this with a glowing reputation.
The saga serves to emphasise how much the qualities of leadership and vision determine the fortunes of any firm. You only need to look at some other results out this week. We’re talking here of Laing O’Rourke and Morgan Sindall, which under the charismatic leadership of their founders are fizzing with new ideas and old-fashioned, swashbuckling construction gusto.
Denise Chevin, editor
What are you like at football?
Never mind the injuries and the transfers … as the football season kicks off, the story for spectators in construction is how much work is planned in the sector. Liverpool is to build a £300m stadium at Stanley Park, Everton is moving to a £150m ground at Kirkby and Portsmouth’s new home will be at the heart of a £600m regeneration of the waterfront. And it’s not just the Premiership; clubs up and down the divisions are realising that they’re sitting on prime city-centre sites. Many have also got money to burn, thanks to TV contracts and monied investors. Whether the industry will be so keen to run on to the pass is another matter – sports specialists are going to be tied up with the Olympics, and the debacle at Wembley will discourage some from risking their reputation for a one-off client. Clubs could find themselves with as much of a headache signing up QSs and builders as star strikers.