Five that worked out
O’Rourke and Laing
Laing, the “good builder”, the firm that gave us the Severn Bridge and much of London, stunned the industry in 2001 by announcing the sale of its construction division to an Irish concrete contractor called O’Rourke. For £1. The collapse of Laing began with its £26m loss on the Cardiff Millennium Stadium, caused by a bizarre row over site access, and was compounded by the disastrous project at the National Physical Laboratory.
Ten years on, Ray O’Rourke is smiling – the company has grown to a turnover of more than £3.6bn.
Persimmon and Westbury
Persimmon became the first housebuilder to enter the FTSE 100 when it took over Westbury for £643m in 2006. A year on, the deal was described as a “masterstroke” by the financial press, as the price tag of nine times forward earnings began to look like a huge bargain. The deal also gave Persimmon access to Westbury’s affordable housing business, which gave it a foothold in another growing market.
Carillion and Alfred McAlpine
When Carillion sealed the deal on its £561m takeover of Alfred McAlpine in early 2008, after months of resistance from the latter, it was met with a mixed response from analysts. But now it looks to have been a shrewd move – it has given Carillion a strong presence in support services and civils, and the efficiency savings are greater than expected.
Balfour Beatty and Centex
Balfour Beatty’s purchase of US housebuilder Centex for £184.6m in 2007 was an example of a big deal that went right. Most importantly, it showed a lot of ambition from Balfour Beatty in making a sizeable overseas purchase – and one which paved the way for the 50-50 transatlantic split the firm is pursuing.
Amec and Morgan Sindall
Amec sold the last parts of its building division to Morgan Sindall for £26m in 2007, completing its exit from the market. The deal worked out well for the seller – whose valuation on the stock market rose like an untethered balloon – and the buyer didn’t do too badly out of it, either.
Five that didn’t
Morrison and Anglian Water
The £263m sale of Scottish contractor Morrison to Anglian Water in 2000 turned bad faster than you could say “Britney Spears”. The two were in court a year later after Anglian realised it had paid far too much. It sued Sir Fraser Morrison and his family for £130m; the row was eventually settled out of court.
Taylor Woodrow and George Wimpey
The £5bn merger of Taylor Woodrow and George Wimpey created the UK’s largest housebuilder, and fuelled speculation that more deals would create a new age of mega housebuilders, ha, ha. Within a month of the deal being finalised in July 2007, Taywimp was forced to announce a £61m hit as the US housing market crashed – and the rest you will be familiar with. By 2008 it was forced into rescue talks with its banks to prevent collapse, eventually agreeing a £1.5bn refinancing deal.
Barratt’s and Wilson Bowden
Announced a month before the Taylor Wimpey deal, the £2.2bn takeover immediately aroused concerns that Barratt had overpaid – and that was before the housing market collapsed. Chief executive Mark Clare abandoned the firm’s strategy of organic growth in favour of the deal and then watched helplessly at what ensued. Barratt’s shares became virtually worthless, it laid off more than 1,000 staff, and it was forced into a refinancing deal with its banks.
Carillion and Mowlem
When Carillion bought Mowlem for £313m in 2006, it thought it was getting a lucrative £12bn defence contract tied to a well-respected contractor – albeit one that had plunged more than £70m into the red. In reality, it bought a pig in a poke, and a £90m writedown followed. After much turmoil, Carillion made a success of integrating the porker – but it was a lesson learned all round.
Erinaceous’ spending spree
Britain’s fastest growing consultant throughout the early part of the decade, Erinaceous bought more than 25 firms in the seven years following its creation in 1999. But the firm, whose name meant hedgehog like, never bothered to integrate them properly – and the firm went into administration with debts of more £220m in April 2008.
Review of the Decade 2000-2009
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Deals of the decade