The American engineering company CHM Hill confirmed an offer for its UK peer, Scott Wilson, after making an audacious attempt to block a bid from a US rival.
URS, a San Francisco-based engineer, said it had the backing of Scott Wilson's board for a 210p a share, or £161m, bid for the British firm yesterday morning. But within hours the Colorado-based CHM had picked up a 12.97 per cent stake in Scott Wilson in the market, prompting the first suitor to announce it would consider its options.
Last night, Jacqueline Rast, executive director of global M&A at CHM Hill, said: "We are hopeful that this offer will be recommended by the board. We believe it offers compelling value and believe the combined companies represent the best fit for shareholders and employees."
She refused to rule out a higher offer in the event of a bidding war.
Under Takeover Panel rules, CHM would have to pitch a bid at or above the same 245p price it paid for its shares in the market. Shares in Scott Wilson, which is a key contractor on the London Crossrail project, yesterday closed up 111 per cent at 253p, as investors anticipated a bidding war.
URS, whose offer is structured in a way that requires the backing of 75 per cent of Scott Wilson shareholders, last night said it was considering its options. Under the terms of its takeover bid, URS also has the right to match any rival offer.
However, Hugh Blackwood, Scott Wilson's chief executive, yesterday afternoon refused to rule out the possibility that the board would change its mind about its recommendation.
Ralph Singleton, head of research at investment group Montanaro, which, with 5.1 per cent, is Scott Wilson's biggest institutional shareholder, said: "We have no preference on the face of it, and it will almost certainly come down to a question of price. We are guessing that any new offer will be materially different, with at least an extra 10 per cent on the table."
The rise in the value of the US dollar relative to the pound in recent months has made UK assets cheaper for American businesses. Martin Koffel, the chairman and chief executive of URS, said that Scott Wilson was a good strategic fit.
Mr Koffel said: "Upon completion, we expect URS would be among the top 10 UK engineering firms by revenue, with the added scale and expertise to perform infrastructure assignments that are among the largest and most complex in the country.
"Outside the UK, Scott Wilson's offices in Warsaw, Hong Kong, New Delhi and Dubai provide a strong complement to URS's locations in Frankfurt, Paris, Madrid, Milan, Shanghai, Sydney and Toronto."
When asked about potential job losses after a deal, Mr Koffel added that he equated a successful engineering business with higher staffing levels, but said that the combined groups were likely to find "back-office efficiencies" in areas such as accounting and IT.Reuse content