Amec raises £707m from sale of French division

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The Independent Online

Amec, the engineering and project management group, yesterday unveiled the £707m sale of its French arm to the private equity group which owns Kwik-Fit and United Biscuits.

The amount being raised from the disposal of SPIE to PAI partners is far higher than analysts had expected, and Amec shares initially climbed strongly before being dragged lower by the wider fall in stock markets.

The sale of SPIE, which specialises in electrical engineering, communications and energy and rail contracting, clears the way for the demerger of the remainder of Amec into two separate businesses.

The company's UK infrastructure division, which is involved in wind farms and major construction projects such as Heathrow's Terminal Five, is being spun off, leaving Amec as a pure oil, gas and nuclear contracting business.

Amec said it still aimed to return cash to shareholders from the sale of SPIE, but how much would depend on the amount of capital needed for the two remaining businesses.

PAI, which looks after a buyout fund worth €7bn (£4.8bn), only entered the race for SPIE late last week when it came in with a knockout bid which the Amec board accepted almost immediately.

The other bidders included Vinci, the rival French engineering group, although Amec has always believed that the highest price was likely to come from a private equity bidder.

The SPIE sale is not expected to run into any union opposition or regulatory hurdles, and is expected to be completed in August. Amec said it would result in an exceptional profit of at least £220m in this year's accounts.

Amec shares were initially up by 5 per cent as the market reacted to the better-than-expected sale price. Most analysts had expected SPIE to fetch no more than £500m to £550m. But the shares later fell, ending the day 6 per cent lower.

Observers said that Amec appeared to have been hit by the fall in oil-related stocks, given that it too will become much more dependent on oil and gas once the demerger is complete.

In addition to Kwik-Fit and United Biscuits, PAI also led the buyout of France's leading LPG distributor Antargaz and the specialist clothing and footwear retailer Vivarte. SPIE has sales of £1.76bn, mostly in France.