The future of Costain looked in doubt this week after the £358m acquisition of Kvaerner’s construction division by Swedish giant Skanska.
Skanska, which owns a 7.6% stake in Costain, has promised to honour its joint-venture contracts with the 150-year-old contractor but has refused to say more.
This has led to speculation that Skanska will not exercise its option to buy a 40% stake in Costain, which expires in November, and will end further co-operation.
One analyst said Skanksa would use Kvaerner as a springboard for expansion in the UK rather than Costain. Kvaerner has a turnover of £1.3bn – more than three times that of Costain.
It gives us a leading position in the UK and also a presence in Asian markets
Claes Björk, Chief Executive, Skanska
Costain chief executive John Armitt played down the importance of the Kvaerner sale. He said: “We are not dependent on Skanska to survive and do business. The extent to which we work together in the future is an issue for the future; it’s not going to cause me loss of sleep.”
He added: “Clients are dealing with a name in Costain that they have known for more than 150 years.
I wouldn’t deny having a partner like Skanska has helped us rebuild, but we could survive without them.”
Anders Karlsson, head of Skanska Europe, declined to comment on the future ownership of Costain but said the Kvaerner deal would not affect the contractual arrangements. He added: “We are going to sit down with both managements and see how we can resolve any conflicts between contracts.”
We are not dependent on Skanska. It’s not going to cause me loss of sleep
John Armitt, Chief Executive, Costain
The takeover capped a frenzied week of deals in the construction sector. Last week, contractors Try and Galliford merged while Anglian Water stunned the City by acquiring Morrison for £262m.
The Skanska deal will see Kvaerner’s name disappear, although Karlsson said UK names such as Trollope & Colls will remain.
Skanska chief executive Claes Björk said the acquisition was a significant step in the firm’s expansion. He said: “It gives us a leading position in the UK and also a significant presence in several Asian markets. I regard it as very important for Skanska’s continued development.”
Kvaerner chief executive Keith Clarke, who stays on as head of the construction division, said [the construction arm’s] growth plans had been held back by belonging to Kvaerner. He said: “We just think it’s great that someone is interested in construction. This is our preferred option. We are dead chuffed.”
Lars Johansson, head of Skanska UK, said he would continue to work with Costain and that the Kvaerner team would operate in parallel with Skanska’s UK team.