CH2M Hill, the international engineering firm with headquarters in Douglas County, said Monday it will acquire the London-based Halcrow Group Ltd. for $358 million to expand its global reach.
The acquisition is also an effort to keep pace with the wave of mergers creating bigger, international engineering firms.
“They’ve been merging like wildfire,” said Lee McIntire, CH2M Hill’s chief executive. “The reason is the global market has become so interconnected.”
Since 2000 the number of engineering firms with revenues of more than $1 billion grew from seven to 24, according to the Environmental Financial Consulting Group.
“Most of that was from acquisitions, and that puts pressure on other firms to keep up,” said Paul Zofnass, president of the consulting group.
The Halcrow purchase gives CH2M Hill a firm with 2010 revenues of about $720 million, 80 offices worldwide and 6,000 employees. Halcrow has a strong presence in the Middle East — a key area for major projects, McIntire said.
CH2M Hill has 23,000 employees and 2010 revenue of $6.2 billion.
Since becoming CEO in 2009, McIntire has pushed to increase CH2M Hill’s international portfolio.
“We’ve been an international firm but not a global firm,” McIntire said.
In June 2010, CH2M Hill was outbid in an attempt to acquire the British engineering firm Scott Wilson Group Plc, McIntire said.
Halcrow and CH2M Hill are complementary rather than overlapping, McIntire said. “This makes us much more than a U.S. company,” he said.
The companies are also a good fit because both are employee-owned companies, Zofnass said.
“Halcrow has a great reputation and several firms have taken a run at it,” Zofnass said. “But the employee ownership is held in trust and it was hard to deal with that.”
Halcrow approached CH2M Hill about the acquisition, Peter Gammie, Halcrow’s CEO, said in a statement.
“We have worked together on many occasions and have become very much aware of each other’s strengths,” Gammie said.
Gammie is set to retire at the end of this year, McIntire said.
Among the projects the two companies have collaborated on is the reconstruction of Iraq’s water infrastructure.
Under the agreement, which is set to be completed in November, CH2M Hill will pay $193 million in cash and assume $64 million in debt and $101 million in pension obligations.
The acquisition is subject to a vote of Halcrow shareholders and review by the United Kingdom High Court.
Mark Jaffe: 303-954-1912 or mjaffe@denverpost.com
