City reacts with scepticism as firm announces plan to sell Spie and split into two separate companies
Amec intends to sell its French services business as part of a radical restructuring brought on by a £70m loss on contracts.
Sir Peter Mason, Amec chief executive, said last Thursday that Spie, the most valuable part of Amec, would be sold. Last year it made a £2bn turnover. He said the rest of the company would be split into two separate quoted businesses: UK infrastructure, and energy and process industries.
The move is seen by analysts as effectively putting a “for sale” sign on the company.
Mason said he did not envisage any problems finding a buyer for Spie: “It’s very clear that there is no shortage of buyers, ranging from trade buyers to private equity investors. I don’t believe we will have any difficulty in getting an attractive price.”
The biggest part of Spie’s operations are multi-technical services, which includes European oil and gas work and a UK roads business.
Amec’s shares rose 15p or 5% to 372p last Thursday largely because of takeover rumours. However, shares dropped 18p or 5% the next day to 354p as news of the £70m hit emerged. The price was also depressed by warnings that there could be further hits to come.
Seymour, an analyst at Bridgewell Securities, said the business was not worth its current share price, which on Wednesday was about 345p.
I don’t believe we will have any difficulty in getting an attractive price
Sir Peter Mason, Amec
Seymour said that Amec’s most alarming revelation was a £15m provision against gas and oil contracts at a time when the sector was booming.
Mason tried to reassure the market on Thursday by saying that after the Spie sale Amec may have enough cash to return some to shareholders. However, Bridgewell estimated that Amec’s debt would actually rise to £110m because it would lose cash reserves within the business.
Seymour said although restructuring was needed, he was concerned about the sale of a core part of the company. He said: “A support services company that sells its multi-technical services business – you have to question that.”
Mason’s future at Amec is unclear. At 58, he is unlikely to remains with the company if the whole business is sold off, although if it remains as two separate entities, it is possible that he would become chairman of one of them.
The sudden departure in April of Carlos Riva, the UK chief executive and chairman of Amec’s Americas business, left Mason with no obvious successor.