CH2M Hill Eyes Global Spread With Buy of U.K. Firm Halcrow
In one of the largest acquisitions so far this year by a U.S. firm, Colorado-based CH2M Hill Cos. on Sept. 26 said that it has agreed to acquire U.K. global transportation engineer Halcrow Group Ltd. for $192 million in cash. The deal, which CH2M Hill says also includes the firm's outstanding debt and pension liability, could be valued at $356 million.
The deal, set to close in November, would expand CH2M Hill's global footprint and engineering strength as well as improve cash flow for privately held Halcrow, which is struggling in some markets. Halcrow shareholders and the U.K.'s high court must approve the deal.
CH2M Hill, with expertise in design-build, operations and program management, reports $6.3 billion in total revenue. Halcrow reported 2010 revenue of about $719 million. CH2M Hill CEO Lee McIntire says, “[With the purchase] our global footprint will be deeper and our bench strength even more robust.” Halcrow's 6,000-person workforce is down from the 6,983 total reported to ENR in July; however, it includes 3,000 engineers, “a high percentage in the industry,” McIntire says. “[Halcrow] has a pretty good backlog,” he adds.
McIntire says the deal would create a firm of 30,000 employees, with 11,000 outside the U.S. Halcrow CEO Peter Gammie, who is set to retire and become a consultant, says that, where the firms “share geographies, we are reinforcing one another rather than duplicating.”
Halcrow's senior management will remain in place, McIntire says, and any restructurings will not take place for at least two quarters, including decisions on the status of the U.K. firm's brand.
In June 2010, CH2M Hill made purchase overtures to Halcrow that were not accepted. The U.S. firm then made a failed bid against URS Corp. for U.K. transportation firm Scott Wilson plc. Analysts were relatively positive about the $333-million final offer, but some sources believe URS overpaid. Former Halcrow executives and industry observers, who requested anonymity, point to impacts on the U.K. firm from falloffs in British and U.S. infrastructure markets.