COMPANY NEWS
Halcrow sells out to CH2M HILL
Sep 2011
Paula Wallis and Shani Wallis, TunnelTalk
- Halcrow of the UK has concluded a deal to sell itself to CH2M HILL of the United States.
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- Under the agreement CH2M HILL will buy 100% of the issued and to be issued share capital of Halcrow Holdings Limited for £124 million ($194 million) in cash and take over the firm's outstanding debt and pension liability for a total reported purchase value of more than $356 million.
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- With the addition of Halcrow, CH2M HILL will more than double its international presence to almost 30,000 employees globally with more than 11,000 outside of the US. The Colorado-based, employee-owned, company reported $3.6 billion in worldwide revenues for 2010. Halcrow is currently owned by the Halcrow Trust and employee shareholders and employs about 6,000 people in about 98 offices in 70 countries around the world. It last reported a turnover of about £500 million for 2009.
- Martin Knights, Global Director of Tunnelling for Halcrow, is upbeat about the move. "My initial reaction, along with the 350 strong tunnelling and geotechncial staff that l represent worldwide, is that the whole will be greater than the sum of the parts and that the two companies complement each other well."
- Knights, the immediate past President of the ITA (International Tunnelling and Underground Space Association) added that Halcrow's technical excellence model and reputation is well known globally. "The acquisition will benefit both companies and enable the combined company to go for interesting large projects around the world."
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Halcrow Chief Executive Peter Gammie
- Peter Gammie, Chief Executive of Halcrow said that the board's decision to approach CH2M HILL to discuss the sale "reflects an increasing trend" in the global engineering industry. It "will create a very significant value proposition for clients [and] where we share geographies, we are reinforcing one another rather than duplicating." He said the buyout comes after having worked with CH2M-HILL on numerous projects going back many years.
- The two companies are currently working on the Thames Tideway project in London where CH2M HILL is the project's program manager and Halcrow a subconsultant on the $6 billion sewage interceptor and storage tunnel through London. Both are also working on London's £14.5 billion Crossrail project.
- CH2M HILL Chairman and CEO Lee McIntire called the acquisition a game changer for the company's clients. "Our global footprint will be deeper and our bench strength will be even more robust," he said. "By combining our resources and leveraging our collective technical know-how, we will set a new standard for the marketplace. Best of all, our two firms are ideally suited in terms of cultures, markets, geographies, and we have a shared long-term vision for the future."
- While both firms are putting a good spin on the move, contractions in the UK infrastructure market as well as payment difficulties in the Middle East are said to be driving the consolidation. According to reports McIntire says the combined firm would have $7.1 billion in revenue.
- There is no news of a new name for the merging major players, but for Halcrow it will be end of the independent entity since it was founded in 1868. As well as the Crossrail and Tideway projects in London, the company is heavily invested in the Middle East and is working on tunnelling projects for the metros in Hong Kong, Kuala Lumpur and Rio de Janeiro, the high-speed rail proposal between Sao Paolo and Rio de Janeiro in Brazil, and water projects in Argentina.
- Signature projects for CH2M HILL include the Singapore Deep Tunnel Wastewater Program, the London 2012 Olympic and Paralympic Games Program, the Panama Canal expansion program, and the sustainable MASDAR City in the United Arab Emirates.
- Gammie, who is set to retire and become a consultant once the deal is complete, said the company was still in the process of informing employees and industry partners of the sale. "CH2M HILL is an ambitious and progressive company with strong growth plans, and I see great opportunity for employees and for Halcrow as a business," he said.
- Knights said the coming weeks and months will be very busy reassuring clients that the consolidation will not impact their projects adversely and in helping the two companies merge. He added that he is already in contract with Steve Hunt, his counterpart at CH2M HILL. "Steve and l are already talking about the future. He is as positive as me and my Halcrow colleagues are about yesterday's formal announcement."
- Halcrow shareholders and the UK High Court must approve the deal that is set to close in November.
- Roll out of final tunnel contracts for Crossrail - TunnelTalk, Mar 2011
Lee Tunnel start for London's Thames Tideway supersewer project - TunnelTalk, Mar 2011
Two extremes in one for Singapore's DTSS - TunnelTalk, Mar 2005
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