The two sides are refusing to put any figures on this unprecedented deal, which would see O'Rourke take over a company four times its size. Industry sources say O'Rourke will pay about £70-80m, with Laing leaving £60m in the £1bn business to cover future liabilities. But contractors that have looked into buying Laing say that £100m would be more realistic.
And City sources claim that the sweetener could be even bigger once discussions over due diligence are finalised. "If the sale price is £80m, the dowry could be £200m," said one source, who criticised Laing for not revealing the figures.
Laing's construction chairman Jim Armstrong was tight-lipped about the deal. He said the due diligence process would give O'Rourke access to staff and sites. And asked how the deal would be sold to staff, he said: "This is going to be through the press announcement. It's a clear statement of strategy for a buyer that is able to combine direct labour with the skills of Laing." O'Rourke chairman Ray O'Rourke, who was on holiday in Germany, was unavailable for comment. A spokesperson said: "I think he wants to let the news sink in at this stage." In a statement to the City on Monday, Laing said the deal would establish one of the UK's leading contractors. O'Rourke, which claimed that there would be no redundancies, said the move would bring forward its growth plans by eight years. The deal will create a group with a turnover in excess of £1.2bn.
In a separate statement, Laing's construction arm said the firm would be run as a separate operation from O'Rourke. The statement said: "We have been through a period of uncertainty, and the announcement means that an end to the current situation is in site. It is very encouraging that O'Rourke wants Laing to continue trading separately. and has a real desire to develop the business to its full potential." O'Rourke's swoop has stunned the industry and led to predictions of a major shake-up in the sector, with specialists taking the leading role in construction away from traditional contractors.
It also emerged that the chase for the construction operation, which started last November, ended as a one-horse race, with other foreign potential bidders dropping out weeks before this week's announcement.
Bouygues, believed to be up against O'Rourke in the final stages of the sale, distanced itself from the deal. A Bouygues source said: "Like a number of people, I am sure we had a look. I think it was slightly erroneous that we were said to be in the last two or three." Industry sources say the key decision for O'Rourke will be where to position Laing. One source said: "The key is whether it leaves Laing as an Egan-style contractor managing projects or whether Laing is more integrated into O'Rourke, taking it back to its building roots. One thing is for sure – O'Rourke cannot vacillate about this." The source said the business climate would be crucial for the merged firms. He said: "The problem will come if the climate deteriorates – there are a lot of long-running staff at Laing. The bills for redundancies would be huge." The source said the deal was a major move for both firms – in different respects. He said: "For O'Rourke it is an act of great ambition. For Laing it is an act of desperation."