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Consultant in need of a make-over

FINANCE

WS ATKINS, like Amey, is now in play. It may be awkward for a company which specialises in organising and managing the routine operations of other organisations to find itself on the receiving end of bid interest.

But Atkins' shareholders, who have watched the value of their investment dwindle by around 86 per cent over the past two years, may feel that it is their best hope.

In recent years, of course, Atkins has transformed itself from a consulting engineer to an integrated support services group. But like Amey, the group has succumbed to over-ambition and high debts.

The group's first-half pre-tax loss of £33 million reflected not only billing problems but also high bidding costs on PFI jobs - notably as part of Metronet, the infrastructure consortium in which Atkins has a 20 per cent stake - difficulties in north America and an exposure to the weakening commercial property market.

Apart from devastating the share price, the results raised doubts about the concept of a diversified support services group and whether running such a complex range of outsourced services through 175 offices with 15,000 staff could be profitably done by one company.

These doubts will have been reinforced by the Amey saga and Atkins will have to produce a compelling case if it is to successfully resist the bid approaches.

And it will not have been helped by the failure to find a new chief executive in the four months since the departure of Robin Southwell.

Atkins shares shot up 18 per cent to 109.5p on news of the approach. Even if the rumoured private equity bid of 132p a share materialises - valuing the group at around £130 million - this would not be expensive for a business with a strong market share, a string of blue chip clients and a turnover approaching £1 billion.

Indeed, the prospect that London Underground will agree terms with Metronet should add to the attraction of Atkins.

But whoever is in charge, it seems unlikely the group will remain in its present shape.