EC Harris, the UK arm of Dutch engineering giant Arcadis, will now offer a āfull set of integrated servicesā
Arcadisā planned Ā£256m acquisition of UK engineer Hyder will benefit its existing UK-based business EC Harris by enabling it to offer a āfull set of integrated servicesā, the boss of the Dutch engineering giant has said.
Arcadis revealed last week it has agreed a deal with the board of Ā£297m-turnover, 4,500-strong Hyder, with the acquisition expected to close in the fourth quarter this year, subject to shareholder backing.
The deal will see Arcadis grow to become a ā¬2.9bn-turnover (Ā£2.3bn), 26,500-strong business.
Arcadis chief executive Neil McArthur told ŠŌ°ÉµēĢØ this week that EC Harris would ābenefit greatly from the dealā, particularly from being able to ācombine its project management, cost management and business advisory services with Hyderās design and engineering servicesā in the UK and Middle East.
McArthur said: āThe deal will allow EC Harris to offer our clients a full suite of business capabilities, including design and engineering.ā
The deal will allow EC Harris to offer our clients a full suite of business capabilities, including design and engineering
Neil McArthur, Arcadis
Industry leaders told ŠŌ°ÉµēĢØ the Arcadis/Hyder deal, along with Aecomās agreed $4bn (Ā£2.3bn) acquisition of URS announced last month - which would make Aecom the largest consultant in the UK - would shake-up the construction consultancy market.
Keith Howells, chairman of employee-owned engineer Mott MacDonald, said the deals will increase the pressure on smaller firms to be āefficientā, as large consolidated corporate firms ācan use price as a weapon in markets where they want to make headwayā.
He said the 16,000-strong Mott MacDonald was āvery happy to join up with other large employee-owned firms to deliver scale and there are lots of them out there if the market gets ridiculousā.
Hanif Kara, co-founder of 220-strong engineer AKT II, said the deals were āquite positiveā for SME engineers: āThe gap between āsmallā and ālargeā is growing bigger. These [consolidating corporate firms] canāt cope with doing small complex projects in central London; theyāll lose money on these. That leaves more work for firms like ours.ā
Lance Taylor, chief executive of cost consultant Rider Levett Bucknall, questioned the value of M&A deals in construction consultancy: āMergers and acquisitions make great headlines but [really] only have a negative impact on the long-term interests of the acquired firm, especially its hard working staff.ā
David Hurcomb, chief executive of M&E firm NG Bailey, said he expected consultants to consolidate further: āTheyāre people businesses and have a lot of intellectual property to share. I think theyāll get bigger and bigger and size up until theyāre massive like in law or accountancy.ā
The Arcadis-Hyder deal will roughly double Arcadisā businesses in the UK and Middle East, while enabling it to enter the Australian market for the first time.
Arcadisā UK division, which trades as EC Harris, will expand to a ā¬322m-turnover (Ā£255.5m), 3,800-strong business.
Arcadisā Middle East business will jump to ā¬179m (Ā£142m) turnover, while the firm will gain a ā¬79m (Ā£63m) foothold in Australia.
McArthur said Arcadis has identified āgrowth opportunitiesā from utilising Hyderās 900-strong offshore engineering design facilities in the Philippines, India and Jordan.
Arcadis said it expected to make āannual pre-tax synergies of around Ā£15mā from the deal, with these expected to be āfully realised by the end of 2016ā.
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