URS is deciding if its desire to acquire U.K.-based engineering firm Scott Wilson Group plc is strong enough to further sweeten its buyout offer to match a $285.5 million counteroffer made June 28 by CH2M Hill.

URS, based in San Francisco, said on June 29 that it is “considering” boosting a $242-million bid to match, but provided no other detail.

But at least one financial expert believes the price could continue to rise since both prospective buyers have enough ready capital and have been aggressive in the past in making acquisitions. “Both firms appear to have room before the deal becomes dilutive,” he says.

CH2M Hill’s buyout bid follows its accumulation of a 13% stake in Scott Wilson, making the Denver-based designer Scott Wilson’s largest shareholder.

The U.K. firm posted revenue for its fiscal year 2010, which ended in April, of $490 million, which was down 6% year to year. Scott Wilson ranks 54th on ENR’s List of the Top 200 International Design Firms, with $182.6-million in 2009 engineering revenue. More than 52% was in transportation.

Wilson is involved in design of London’s Crossrail train line and is in joint venture with AECOM to supervise design, procurement and construction on the estimated $6.5-billion Izmit Bay bridge in Turkey.

Scott Wilson appeared to welcome the counteroffer.

“CH2M Hill has a demonstrable track record of supporting and developing the businesses we acquire,” says Wilson’s CEO, Lee McIntire. “The offer we have announced...is superior...both in terms of value and the opportunities it will deliver to Scott Wilson.”

One financial analyst notes that CH2M Hill won the auction for engineering firm Lockwood Greene several years ago and “were pretty aggressive” in acquiring Alaska-based oil service engineer Veco “and both of those worked out wonderfully for them.”

But analyst Richard Rossi of Wunderlich Securities said a possible URS acquisition “will strengthen the company’s U.K. market position and broaden its overall overseas presence,” adding that “Scott’s market strength lines up well with URS’s in both the transportation infrastructure and nuclear power areas, and there should be some cross-selling opportunities, especially given Scott's strength in the high-speed rail market.”

Avram Fisher, engineering and construction sector analyst for BMO Capital Markets Corp., cautions, however, in a June 29 report that Scott Wilson has a $93-million pension liability, “two years of negligible free cash flow, weak orders in the most recent year and risks with collectability of its receivables.”

Even so, Fisher notes the growing attraction of the U.K. acquisitions market. The same reasons that URS bid on [Scott Wilson Group] are motivating several U.S. companies to also for U.K. acquisitions, he says, pointing to CH2M Hill’s competing offer. “Even while the U.K. is suffering through a worse economic environment that the U.S., its assets remain attractive owing to relatively low valuations, low corporate taxes and a talented labor market offsetting the weak cyclical environment.”