Two large global design firms are ending 2014 by announcing major corporate changes that reflect the year's industry trends of rampant consolidation and shifting markets.
To bolster its North American presence and global environmental and water infrastructure work, Denmark-based engineer Ramboll Group A/S on Dec. 17 said it acquired Arlington, Va.-based consultant ENVIRON Holdings Inc., which had $294 million in global 2013 environmental, safety and health revenue and works in about 90 countries.
The privately held firms did not release deal terms, but Ramboll CEO Jens-Peter Saul says they were in talks since 2012. Ramboll, among the top 30 on ENR's Top 150 Global Design Firms list, reported $1.4 billion in 2013 revenue, 34% in building and 26% in transportation.
With ENVIRON's 1,500 staffers including CEO Stephen Washburn who joins Ramboll as an executive vice president, the Danish firm now has 12,500 employees. The buy bolsters Ramboll's initial U.S. foothold made in May with completion of its purchase of a 50-person Houston oil-and-gas engineer.
Despite impacts from the drop in oil prices, the firms "will be a platform for future growth," Saul says. "The market will remain difficult but will be attractive long term."
But Ramboll declined to comment on a Fluor Corp. claim for $2.2-million, filed late in November in the UK High court, related to alleged foundation design errors on the U.K.'s $1.8-billion, 504-MW Greater Gabbard North Sea wind farm.
Fluor took a $400-million charge in 2012, after losing an arbitration with the project's two utility owners.
Fluor also filed a design claims against Danish engineer Carl C. and, in September, had said it seeks about $391 million from China's Shanghai Zhenhua Heavy Industry over claims of delays and fabrication flaws in wind farm site monopiles.
It will exit building construction and fixed-price EPC power, mining and infrastructure, says CEO Stuart Bradie, who joined the firm in June from an executive role at WorleyParsons.
Credit Suisse analyst Jamie Cook on Dec. 15 said the revamp "is timely, given uncertainty with crude [prices] and could produce a smaller but more profitable company.
"Technology remains a key focus given the low risk, high margin characteristics of the business and longer-term acquisitions would be targeted here," she said, adding that KBR also still expects backlog growth next year.
"Transformation will require time and patience but management is well aware of KBR's credibility issues as well as lack of earnings consistency and understands execution is key," said Cook.