Consultant hunts for alternatives as Sweett’s £5.4m Chinese deal wrecks takeover talks
Capita Symonds pulled out of takeover talks with Cyril Sweett several weeks ago after the latter’s £5.4m acquisition of Chinese firm Widnell, Building can reveal.
It is understood that Capita and Cyril Sweett had begun preliminary negotiations for a deal as part of Capita’s plans to boost its project management and QS capability.
A source close to the process said Cyril Sweett’s increased exposure to the Chinese market after the Widnell deal in July had put Capita off the takeover.
The source said: “There had been exploratory talks. When the Widnell deal went through Capita lost interest despite the fact more meetings were in the diary. Suddenly having 400 people in China required a whole lot more due diligence.”
The UK consultancy sector is going through a period of consolidation after Aecom’s £204m takeover of Davis Langdon last month and the £223m acquisition of Scott Wilson by URS in July. A source close to Capita said the company planned more corporate activity this year.
The source said Capita was looking for “a project manager that is making money”, adding: “It would have had a good look at Davis Langdon had it got in early enough before Aecom.”
If the deal had gone ahead, Cyril Sweett would have delisted from the stock market, where it has found life tough since floating in October 2007. The group’s share price has dropped from a high of 122.8p to a low of 23p in May this year, and its market value has fallen from £80m to about £20m.
A source close to Cyril Sweett said: “There have been times when the directors have been upset at where the share price was so I wouldn’t be at all surprised if they talked to private companies about exiting the stock market. They are proud of the brand and have taken it overseas as UK work has dried up, but they are quite pragmatic.”
In the year to 31 March 2010 Cyril Sweett turned over £65.6m and made £2.1m in pre-tax profit; Capita Symonds turned over £272.2m and made a profit of £26.5 in 2009.
Capita declined to comment on the reports. Dean Webster, chief executive of Cyril Sweett, said: “It’s pure speculation. We’re consolidating and have demonstrated that through the acquisition of Padghams and Widnell and we have the funds to continue to do so.”