?Morgan Est and Amec tunnel units merge

31 August 2007

The tunnelling units of UK contractors Morgan Est and Amec have started a merger that will see a single brand name - Morgan EST - used in future but will be an open process to draw out the best practices from both experienced teams, T&TI has been told.

The enlarged tunnelling team will keep its focus on the UK market, T&TI was told by Chris Hughes, managing director of Morgan Est’s tunnelling business unit. There are major projects in the pipeline for the market as well as a lot of utility and transport upgrade work, such as for London Underground. In addition, the combination means that fewer JV partners will be sought in future, he said.

Already the enlarged team has two single-identity bids being assessed by clients, having alerted them to the possibility when Morgan Est’s parent group Morgan Sindall agreed the acquisition of a larger business unit with Amec. The purchase recently closed.

As a combined operation, the tunnelling team will be approaching 100 core staff plus the skilled and experienced electricians and mechanics of both units. In terms of numbers, about 60 staff come from Morgan Est and about 30 from the Amec team.

Hughes has initiated the integration process with visits between the site and plant bases of tunnellers from each firm - Morgan’s HQ and its yard at Rugby, and Amec’s operations base at the DLR extension at Woolwich, east London, and its yard at Swynnerton.

He is serious about approaching the integration of the teams as “a true merger”, noting that the respective tunnelling units have been on “similar journeys” with comparable capabilities, familiarity with in-house design and segment production, and common approaches on pricing.

In revenue terms, Morgan Est’s tunnelling unit brought in more than US$76M (2006 prices) over Jan-Dec 2006, which was slightly ahead of that of Amec’s team. Prior to the scaling-up offered by the merger, the Morgan unit alone was looking at more than US$140M in revenues this year, T&TI learned.

The order book for the combined team is healthy, Morgan having a number of jobs at early stages while the unit from Amec are well advanced on most jobs, such as DLR (T&TI, April p16). Projects underway include Belfast sewers, cable tunnels in Croydon and Hendon, and tube station upgrades at King’s Cross and Shepherd’s Bush.

Amec exited tunnelling and other construction and property-related services in its strategic re-focus on energy and process industries (T&TI, June, p12).

The tunnelling unit came as part of Amec's Design & Property Services (DPS) division, which was bought by Morgan Sindall for US$51M net, after accounting for liabilities. A price for the tunnelling unit was not broken out.

Chris Hughes, MD, Morgan Est tunnelling business unit

Chris Hughes, MD, Morgan Est tunnelling business unit Chris Hughes, MD, Morgan Est tunnelling business unit