Two industry giants are taking steps to expand their footprints, revealing agreements for major acquisitions that, if and when completed, would total about $535 million. London-based engineering and project management firm AMEC said on May 17 that it has agreed to buy Atlanta-area engineer MACTEC for $280 million in cash. EMCOR Group Inc., the Norwalk, Conn., specialty contractor, said the next day that it planned to pay $255 million in cash to acquire USM Services Holdings Inc., a Norristown, Pa., facilities maintenance firm, from its Australian parent.
AMEC’s proposed deal elevates MACTEC, now 85% owned by a private equity firm, into the global services market, while boosting the prospective parent’s presence in the U.S. Under the deal, set to close by the end of June, MACTEC and its 2,600 U.S. employees in 70 offices would join AMEC’s Earth & Environmental (E&E) subsidiary. That unit, now in Atlanta, would shift its base to Alpharetta, Ga., a suburb where MACTEC is located. The acquisition would boost E&E’s global employment to 7,000. AMEC says it employs a total of 23,000 in 40 countries.
Hisham Mahmoud, E&E president since last October, says MACTEC would give its new parent a presence in the eastern U.S. “MACTEC’s mix of business is similar to ours, but our client bases do not overlap,” he says. “I’m very bullish on the U.S. market.”
AMEC reports total revenue at $5 billion. MACTEC ranks at No. 32 on ENR’s list of the Top 500 Design Firms, with $407.7 million in 2010 design revenue. Mahmoud says MACTEC’s management team will be part of the deal, including Ann E. Massey, its CEO since 2008, but he declined to reveal her new title or scope of duties.
“This could be a good fit for AMEC, with both firms having strong traditional geotechnical roots and big federal businesses,” says Andrej Avellini, managing director, M&A and financial consultant EFCG Inc., New York City.
EMCOR says its purchase of USM would add a leading North American provider of facilities maintenance services, which reported revenue of about $375 million. “Our two businesses are highly complementary to each other, as USM is a leader in predictive, scheduled interior and exterior maintenance services while EMCOR leads the market in providing site-based and other electrical and mechanical trades services,” says EMCOR President and CEO Tony Guzzi. The deal is set to close at month’s end.
Avram Fisher, industry analyst for BMO Capital Markets, New York City, terms the deal “an interesting acquisition for the business model this brings” to EMCOR. “The secret sauce is the client relationships that allow it to book national contracts, and we can’t help wonder if this higher- margin contractor model creeps into the core facilities business.”