In the past year, Amey has lost its chief executive and two financial directors, scrapped its dividend, had its accounting practices criticised and been threatened with collapse after running up huge debts. None of this, however, has deterred Ferrovial, which has been looking to buy a PFI contractor for two years.
Ferrovial also said that it would take up Amey’s £60m share in the Tube Lines consortium, which is running part of the London Underground. Fellow Tube Lines members Bechtel and Jarvis took over the stake when Amey failed to secure enough credit ahead of government negotiations.
The offer price of 32p per share is 19% higher than the closing share price on Tuesday – but more than 90% down on Amey’s March 2002 share price of above 300p. The low price gave Ferrovial the opportunity to buy Amey, having initially approached the firm last November and again, more formally, in January.
The bid ended intense City speculation over the future of the group. It is understood the company attracted interest from a number of outfits, but Ferrovial’s offer was thought to be the most attractive. The purchase of Amey will provide the Spanish construction group with a foothold in the UK market, as well as knowledge of operating PFIs. The use of PFI and PPP is growing in popularity outside the UK and Ferrovial believes that Amey will give it a head start in overseas markets.
The acquisition lifted the share prices of other support services firms as the City believes that continental construction firms will feel compelled to keep up with Ferrovial and buy into British PFI expertise.
Ferrovial was not deterred by Amey’s well-documented accounting problems, in which the firm made a £130m loss last year after £121.5m of exceptional charges. The buyer says it carried out extensive due diligence to ensure it would not unearth any more nasty surprises after it had bought Amey.
The deal seems to be done and dusted. Meditor Capital Management and Sterling Investment, which between them hold 32.6% of Amey’s shares, have already accepted Ferrovial’s offer. They can only withdraw their acceptance if an offer of 34.5p or more is made. Amey would also have to pay a break fee of £471,000 if it accepted another bid.