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John Morgan: Morgan Est/Ashurst merger not about costs

Morgan Sindall chairman John Morgan has described the merger of the company’s infrastructure and building divisions as more of a branding move than a full-scale merger.

The company surprised the market today by announcing it would merge Morgan Ashurst and Morgan Est, with Morgan Est chief executive Mark Cutler leaving the business.

Mr Morgan refused to rule out job losses but said cutting costs was not the “rationale” behind the move.

“Increasingly both [companies] have grown, and the Amec acquisition added to both of those businesses. They are doing bigger jobs, and with a lot of those it’s the same clients, and the jobs have a civils and construction element. In a lot of cases the client is looking at Morgan Sindall [rather than Morgan Est and Morgan Ashurst],” he told Construction News.

The two will now have the same brand and the same managing director, Graham Shennan.

Mr Morgan said the two divisions could retain separate offices: “there will still be offices and teams that just do civils.”

“We have asked Graham to go in and sit down to talk about the best way to operate it under the brand. It was getting confusing, and this will clarify [things]”.

Mr Morgan said the purpose of the move was not to cut costs, though he refused to rule out job cuts. “The main rationale is to create a better platform for further growth. You can never rule out job losses, but that’s not the rationale for doing things.”

Mr Morgan said that losing Mark Cutler was “a great shame. But you can only have one managing director.”

The other divisions of Morgan Sindall – including its large fit-out and affordable housing divisions (which include Overbury and Lovell) – will remain separate.

“The other divisions are quite separate and don’t work together to anything like the same extent.”

Morgan Est and Morgan Ashurst remain quite different businesses in some ways, Mr Morgan conceded, in that the infrastructure business has a small number of customers and lots of long-term jobs, with Morgan Ashurst often the opposite: “Having said that, a big part of Morgan Est is utilities – that’s lots of little jobs.”

He said the company was already doing big-ticket contracts, so it was hard to see how the merger would see the companies pitch for anything bigger than they are at the moment. “I think to be honest we are doing pretty big jobs in any event.”