Amec break-up to release cash for investors

Amec, the engineering, construction and project-management group, yesterday unveiled plans for a three-way break up and a return of cash to shareholders.

The company's French services division Spie, is being put up for sale and this will be followed by the demerger of its UK infrastructure arm, which is presently involved in wind farms and construction projects such as Heathrow's new Terminal 5.

This will result in Amec consisting in future of only its international oil, gas and nuclear engineering division, which currently accounts for just under half the group's £4.5bn turnover and has sizeable contracts to help rebuild Iraq.

Amec also announced its withdrawal from roadbuilding in the UK and US, a move which will entail exceptional charges this year totalling £70m.

The City welcomed news of the break-up - and Amec shares, which have risen 10 per cent in the past month on bid speculation, climbed a further 4 per cent to close at 372p, valuing the company at £1.24bn.

Sir Peter Mason, Amec's chief executive, said the group did not have the resources to expand Spie by acquiring similar businesses so the best option was to put it up for sale.

He denied that the break-up was a pre-emptive move to ward off a hostile bid but he said that if Amec did receive an approach, it was bound to consider it.

Spie, which Amec bought into in 1997 and took control of two years ago, is valued at £280m in the books but analysts estimate it could fetch £450m.

Sir Peter said that a number of rival trade buyers, such as Vinci and Bouygues, were likely to be interested in Spie, but a private equity firm would be able to pay the most. He would not be drawn on the size of the potential cash return to shareholders.

Amec hopes to complete the sale of Spie by the second quarter of next year and the demerger of its infrastructure business by the middle of the year.

Sir Peter retires as CEO next September.

Spie has sales of £1.5bn a year, mostly in France. The infrastructure division, which is planning to develop three big windfarms in Skye, Lewis and Ayrshire and is also part of the $1bn (£590m) Incheon bridge project in Korea, has sales of about £1bn.