The industry was rocked this week by a series of deals involving major players Kvaerner and Morrison and medium-sized firms Try and Galliford.
In a move that the City sees as a catalyst for further changes, Skanska bought Kvaerner’s construction arm for £358m.
The deal was struck just a day after Morrison stunned the stock exchange by naming its mystery suitor as industry outsider Anglian Water.
Morrison chairman Sir Fraser Morrison, who will share a £114m fortune with his brother Gordon if the Anglian Water deal goes through, denied that he was cashing in on the £262m acquisition.
He pointed to his continuing role in Anglian as proof that he was not walking away from the family firm. He said: “It is clear we are not cashing in. Gordon and I will have a 3% stake in Anglian Water. It’s far from that.”
Sir Fraser, who will oversee strategic development at Anglian Water, is already being tipped as a future chairman. Gordon, sales director at Morrison, will become Anglian executive director responsible for asset management.
We are still pretty modest. We need to drive the business forward up to another rung
David Calverley of Galliford Try
The acquisition will see Morrison, which dropped construction from its company name in July, concentrate on facilities management and private finance initiatives as well as on the utilities, property and transport sectors.
Anglian Water chief executive Chris Mellor said there were major opportunities nationally and internationally for the enlarged group.
Sir Fraser said the deal had been misunderstood by the City, which thought that Morrison had been overpriced.
He said: “We are completely integrating the businesses. To say Anglian is buying a supplier is a very simplistic reaction. What we have created is a completely new animal.
“Some people do not understand it. We are not a construction company. They have completely missed the point.”
Sir Fraser said an acquisition by a construction firm would not have helped Morrison’s prospects. He said: “Getting together with another construction company would not have added anything like the direction or strategy that this deal gives us.”
[A deal] with a construction firm would not have the direction or strategy that this deal has
Sir Fraser Morrison
The first deal of the week, Try’s merger with Galliford, created a £450m-turnover firm with a strong presence in the South-east and the Midlands. Called Galliford Try, the firm plans to double its market capitalisation from £50m to £100m in the next three years.
Chief executive David Calverley admitted that the new group was still small but said being valued at £50m was a significant threshold. He said: “A number of funds will not invest below £50m, which will open up opportunities for us.
“The merger gets us over one threshold but we recognise we are still pretty modest. We need to drive the business forward up to another rung.”
The firm said it was looking at bolt-on additions to its housing and contracting divisions.
Deputy chief executive George Marsh said the group would target PFI work up to £50m. He added that there would be a maximum of 12 redundancies.
