AMEC Initiates Sale Process of AMEC SPIE

AMEC plc is initiating the sale process of AMEC SPIE. This follows the completion of the first stage of an ongoing review of AMEC's options for maximising long-term growth.

Sir Peter Mason, Chief Executive, said: "AMEC has grown three substantial businesses, which increasingly represent different investment propositions. Today, the scale of new opportunity in some end-markets - such as oil and gas, PPP and investment in the AMEC SPIE branch network - has made it increasingly clear that we do not have the resources to fully exploit the prospects in all three of our businesses and still achieve the growth and returns we want.

The proposed sale of AMEC SPIE will strengthen AMEC's balance sheet, giving greater operational and financial flexibility, to leave a simplified group, more focused on its customers, people and wider stakeholders. Beyond that, we must look at the future shape of our business to determine the right way forward."

Strategy
AMEC has built three substantial businesses, which when reviewed showed increasingly different investment propositions. This was recognised in the re-presentation of AMEC into three business segments in December 2004.

AMEC has concluded the activities all present considerable, but different opportunities. As currently structured, AMEC does not have the resources to take full advantage of all of these. For this reason, AMEC has taken the decision to initiate a sale process of AMEC SPIE, to allow it to participate in the accelerating consolidation in its sector and to release resources to promote growth in AMEC's remaining services and investments activities.

The ongoing business review is evaluating options for the remaining businesses within AMEC to assess how best to deliver maximum value for shareholders. The review will include, inter alia, the possible separation of AMEC into two businesses, one focused on energy and process industries, and one which would invest in, develop and deliver UK infrastructure, including PPP projects, property and wind developments. The review is also considering a return of surplus cash to shareholders following the proposed sale of AMEC SPIE, subject to establishing suitable capital structures for each of the resultant businesses.

The Board believes that the proposed sale of AMEC SPIE, in addition to providing greater operational and financial flexibility, will leave a simplified group, more focused on its customers, people and wider stakeholders.

Proposed Sale of AMEC SPIE
The Board is initiating a sale process for AMEC SPIE, which includes Continental European Oil and Gas, Rail and Multitechnical Services activities in electrical and mechanical engineering, communications and nuclear. These activities generated total revenues of over £2 billion in 2004, the largest component of which was Multitechnical Services, with sales of £1.3 billion and pre-tax profits of £47 million.

AMEC made its original investment in AMEC SPIE in 1997 and acquired full control in 2003. Over the past eight years, AMEC SPIE has provided multitechnical services in Continental Europe, operating from a network of over 300 locations in France, Benelux, Portugal and Spain. AMEC SPIE's local services business model provides services across an extensive branch network for a large and diverse client base, with a relatively small average contract value.

AMEC SPIE's market place is highly fragmented and this has facilitated the growth of the business both through the acquisition of additional points in the network and the building of services capabilities.

While AMEC SPIE has been a key player in the gradual consolidation of its industry to date, the Board considers that this process is accelerating and that AMEC SPIE's participation will be restricted while it remains part of the AMEC group, to the potential detriment of future shareholder value.

As at 30 June 2005 AMEC SPIE businesses had a book value of £280 million.

Subject to shareholder approval and necessary legal and regulatory consents, completion of the proposed disposal of AMEC SPIE is anticipated during the spring of 2006.

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Posted 28/11/05

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