City reacts with scepticism as firm announces plan to sell Spie and split into two separate companies

Amec intends to sell its French services business as part of a radical restructuring brought on by a 拢70m loss on contracts.

Sir Peter Mason, Amec chief executive, said last Thursday that Spie, the most valuable part of Amec, would be sold. Last year it made a 拢2bn turnover. He said the rest of the company would be split into two separate quoted businesses: UK infrastructure, and energy and process industries.

The move is seen by analysts as effectively putting a 鈥渇or sale鈥� sign on the company.

Mason said he did not envisage any problems finding a buyer for Spie: 鈥淚t鈥檚 very clear that there is no shortage of buyers, ranging from trade buyers to private equity investors. I don鈥檛 believe we will have any difficulty in getting an attractive price.鈥�

The biggest part of Spie鈥檚 operations are multi-technical services, which includes European oil and gas work and a UK roads business.

Amec鈥檚 shares rose 15p or 5% to 372p last Thursday largely because of takeover rumours. However, shares dropped 18p or 5% the next day to 354p as news of the 拢70m hit emerged. The price was also depressed by warnings that there could be further hits to come.

Seymour, an analyst at Bridgewell Securities, said the business was not worth its current share price, which on Wednesday was about 345p.

I don鈥檛 believe we will have any difficulty in getting an attractive price

Sir Peter Mason, Amec

Seymour said that Amec鈥檚 most alarming revelation was a 拢15m provision against gas and oil contracts at a time when the sector was booming.

Mason tried to reassure the market on Thursday by saying that after the Spie sale Amec may have enough cash to return some to shareholders. However, Bridgewell estimated that Amec鈥檚 debt would actually rise to 拢110m because it would lose cash reserves within the business.

Seymour said although restructuring was needed, he was concerned about the sale of a core part of the company. He said: 鈥淎 support services company that sells its multi-technical services business 鈥� you have to question that.鈥�

Mason鈥檚 future at Amec is unclear. At 58, he is unlikely to remains with the company if the whole business is sold off, although if it remains as two separate entities, it is possible that he would become chairman of one of them.

The sudden departure in April of Carlos Riva, the UK chief executive and chairman of Amec鈥檚 Americas business, left Mason with no obvious successor.