Listed Dutch engineering giant to fuel expansion with buyout of £253m turnover ECH

Consultant and QS EC Harris is to be bought by Dutch engineering giant Arcadis in a multi-million pound deal, subject to approval by EC Harris partners.

The deal, formally announced to Dutch stock market this morning, will see the £253m-turnover UK consultant join forces with the global firm to create a 19,000-strong built environment consultancy with E2.3bn revenues. The move sees EC Harris become the latest UK consultant to be bought by a foreign firm, with Davis Langdon, Halcrow and Scott Wilson all succumbing to takeovers within the last 18 months.

Arcadis plans to buy EC Harris with three million shares, worth E42.8m at Arcadis’ Friday closing price, plus an undisclosed cash sum.

EC Harris chief executive Philip Youell will keep his role and take a job on Arcadis’ executive board. EC Harris chair Richard Clare will step down as chair, taking a “strategic client development” role at the combined firm and remaining on the EC Harris board.

Arcadis, headquartered in the Netherlands, has a particularly strong market presence in continental Europe, the US and Latin America. The deal will see its UK business, which turned over £58.7m in calendar year 2010, integrated in to EC Harris within the next 12 months, with the combined firm reporting to the Dutch parent.

Arcadis declined to comment on the impact of the deal on the role of the current chief executive of Arcadis UK, Mike Carroll.

EC Harris partners were briefed on the deal on Friday and have to agree to the takeover before it can go ahead. A vote is due to take place on 31 October and, if approved, the deal is likely to go through by the end of the year. Partners will receive a cash lump sum as well as shares and share options, most of which will not be possible to cash until set periods after the merger goes through.

EC Harris has made no secret of its desire to expand through acquisition or merger in order to meet the challenges of an increasingly globalised market, and Youell has previously admitted the firm is targeting a major deal before the end of the year. However, the deal sees an end to the firm’s ambitions to float on its own, which were outlined in July last year.

Arcadis chief executive Harrie Noy said the value of the deal had to remain confidential, but was in line with recent transactions in the market, including Halcrow’s purchase by CH2M Hill. Using the same turnover multiple as achieved in the Halcrow deal would value EC Harris at £124m.

Noy said the takeover, which has been being discussed in depth for the last six months, would allow both firms to fulfil long term ambitions. He said: “This is quite an exciting step for us. EC Harris is a tier one company. When we’re were looking to expand, EC Harris was on the top of our list.”

Noy said the purchase of EC Harris gave Arcadis a foothold into high growth markets in Asia and the Middle East, as well as fitting in to its long term strategy of providing “high added value services” rather than “commodity” consulting. “We want early customer involvement and access high up the value chain where you can really make a difference. EC Harris has real content in this area,” he said.

Youell said the two companies had a “shared view of the world.”