Frontrunner fails to emerge for 拢100m construction division after pressure from City investors forces family to abandon building.
prospects of an immediate disposal of Laing's construction arm receded this week as no buyer emerged in the aftermath of last week's announcement that it was for sale.

French contractors Bouygues and GTM/Vinci this week ruled themselves out of the running for the division, believed to be on offer for 拢100m. Swedish company Skanska, which bough t Kvaerner Construction in September, refused to comment.

Industry sources are now talking about a management buyout, although the firm has ruled out that option.

Other European groups that could be lining up in the wings include German contractors Bilfinger & Berger and Hochtief, NEC in Sweden, Impregilo in Italy and Australian outfit Multiplex.

The decision to sell, first made at a group board meeting in September, followed a troubled three years for the 150-year-old contractor. The division has lost 拢50m since 1997, most notably with the Cardiff Millennium Stadium project, which cost it 拢26m. These losses led to Laing shedding 850 jobs last year.

Construction chairman Jim Armstrong said the decision to sell the division was taken because of pressure from institutional shareholders. Armstrong said: "The City was pushing us to become less of a conglomerate, to become more focused. This is a window of opportunity which has not been available in the last two to three years."

The move has led to predictions of departures from Laing because of the uncertainty over its future. One rival contractor said: "Everyone needs good staff at the minute. I think it is going to lose all its good people."

This was denied by construction chief executive Brian May, who joined the firm in March from Mowlem.

May said: "We were disappointed when we heard the announcement. But having considered it we believe it offers a more secure future for the staff. The new buyer will be committed to construction 鈥� it will be the central plank of their future." May admitted that the move had affected staff morale. He said: "It would not be tenable for someone to work 30 years in a firm and not be upset. It would be somewhat worrying if they were not."

Armstrong said there was sadness among Laing family members. He said: "With the Laing family there are mixed feelings. Since it was the family that developed this over the years I have no doubt there is a sense of loss. But life moves on."

Laing will concentrate on its housing and investments divisions. The sale of construction arm, hoped to be complete by next year, will include the name.

One rival expressed sadness at the decision to sell but said it was indicative of an industry where there was plenty of work but tight margins. He said: "We all know it's an industry that needs to be managed very closely. As soon as you take your eye off the ball things go wrong."

Possible buyers

Multiplex
Mystery still surrounds the intentions of the Australian contractor, which won the contract to build Wembley stadium this autumn. There has been speculation that it will need to form a joint venture with a UK firm to complete the project 鈥� but it may choose to buy instead. Skanska
The summer speculation that surrounded Skanska鈥檚 imminent move into the UK ended in its 拢358m acquisition of Kvaerner Construction in September. Although another acquisition is not out of the question 鈥� witness the group鈥檚 remarkable success in the USA 鈥� buying more market share of Laing鈥檚 size would not appear to fit in with its acquisition strategy. Bilfinger & Berger
This is one analyst鈥檚 tip for the company that will snap up Laing. He says the German contractor has been making noises about getting into PFI, which would make the UK an obvious target. With the German market in difficulties it could be an opportunity to branch out geographically. 鈥淚t is my frontrunner,鈥� the analyst concluded. MBO
While Laing has publicly ruled this out as an option, industry sources still believe a management bid could be viable. One thought that taking the group private, out of the short-termist glare of the City, would do it good. GTM/Vinci
The French duo, which merged in July to create Europe鈥檚 largest construction firm, with a turnover of 拢10.3bn, could be looking to expand. However sources close to the firm this week said that it was not interested in Laing. Bouygues
Industry speculators have for a long time predicted that the French giant, which is heavily involved in PFI contracts in Britain, could buy something big. But this line of thought is dismissed by some on the inside track. As one source close to Bouygues said this week: 鈥淏ouygues is focused on organic growth right now.鈥�