Amec Spie S.A. Business Information, Profile, and History

Company Perspectives:

Spie: The European Enterprise. Spie is a provider of electrical engineering and IT services, and an infrastructure and building contractor. It offers a broad range of first class skills to its clients, delivering total life of asset support from conception, design and construction to operation and maintenance. Its extensive European network ensures close local ties with clients, based on constant availability and compliance with the highest standards of excellence.

History of Amec Spie S.A.

Amec Spie S.A.--known simply as Spie until March 2003--is one of Europe's leading providers of engineering and project management services for both the public sector and private industry, with an emphasis on the electrical engineering, telecommunications, and IT sectors. A series of acquisitions starting in 2001, including VDH in Belgium, Export Telecom Services (ETS), DCCS, and a controlling stake in Matra Nortel Communications Distribution, creating Spie Communications, has transformed Amec Spie into a world-leading communications and network infrastructure support provider. Elsewhere, Amec Spie delivers design and consulting services, as well as turnkey project design and management for manufacturing, rail, and other construction projects--Spie was part of the consortium that built the Channel Tunnel. Following its acquisition by the United Kingdom's AMEC plc, begun in 1997 and completed in 2003, Spie has been restructured into three primary, independently operating subsidiaries: Amec Spie S.A. has become the main holding company for subsidiaries Spie Trindel, Spie Communications, and Spie Energie Services. The former Spie railroad engineering and construction operations have become Amec's continental European rail group, Amec Spie Rail. Lastly, Spie's construction unit has kept its name--one of the oldest in the French construction industry--Spie Batignolles. Amec has indicated its interest in selling off Spie Batignolles as it reorients itself as an engineering services specialist. Amec Spie reported revenues of EUR 3.4 billion ($3 billion) in 2002, more than 90 percent of which were generated in Europe (and 70 percent from within France). The addition of Spie will raise AMEC's revenues to £5.5 billion (more than $9 billion).

Building France in the 19th Century

Spie had long played a central role in the construction of France's--and later the world's--infrastructure. The earliest member of the later Spie was founded in 1846 by Ernest Gouin. With financial backing from, among others, James de Rothschild, Gouin, an engineer who had been working for the Paris Saint-Germain railroad, founded his own workshop in Batignolles. The company, Ernest Gouin et Cie, started out to build steam locomotives for another railroad, Compagnie des Chemins de Fer du Nord, which had been founded the year before.

The economic downturn of 1847, which cut off orders for Gouin's steam locomotives, forced the company to look elsewhere for business. In that year, Gouin turned its metal-working expertise to the public works market, and became the first in France to begin constructing steel bridges. Gouin completed its first bridge in 1852, at Asnières.

Gouin's success at Asnières led the company to expand its operations over the next decade to provide complete bridge construction services, from the design and engineering to laying the foundations, performing brick and stonework, and then constructing the access ramps as well. In 1862, Gouin's growing operations started railroad construction as well. By the end of the 1860s, Gouin was able to provide turnkey construction projects, including ground preparation and draining.

Gouin changed its name to Société de Construction de Batignolles (SCB) in 1871, becoming a public company. Railroad operations became increasingly important for the company, as it became one of France's leaders in that sector. At the same time, SCB continued to manufacture locomotives, exiting that area only in 1928. SCB nonetheless maintained an interest in that area through a subsidiary, Compagnie Générale de Construction de Locomotives Batignolles-Châtillon, set up in 1917. SCB gained expertise building tunnels--the company participated in a first attempt to build a tunnel across the English Channel in 1882--and that expertise, coupled with its bridge-building experience, led the company to expand its railroad construction operations worldwide.

International Infrastructures Giant in the 1970s

The turn of the 20th century saw the rise of a number of other great French enterprises, including Schneider and Empain, both of which were to play an important role in forming the later Spie Batignolles. Groupe Empain had been founded in the late 19th century by Edouard Empain, of Belgium. From humble origins, Empain had become an important early figure in building Belgium's railroads--yet when the Belgian government took control of the country's railroad system, Empain turned to France for his future projects.

In 1881, Empain, later made a baron, founded his own bank in order to provide funding for his industrial interests. Empain's specialty was the construction of electric tramways and other electricity-driven urban mass transportation systems. In the 1890s, Empain's group of companies became one of the world's leaders in that area, building transportation systems throughout Europe and Russia, and as far away as China, Cairo, and the Belgian Congo.

In 1898, Empain became part of the group in building the Paris Metro--considered the company's masterpiece. As part of that project, Empain created a new company in 1900, the Société Parisienne pour l'Industrie des Chemins de Fer et des Tramways Electriques. While its operations also including track laying and other construction services, the company already specialized in the design, engineering, and construction of the electrical infrastructure needed for the electric-powered rail systems.

The Paris-based business soon expanded into other infrastructure projects--in 1923, it built the first high-pressure gas pipeline in France. By 1946, the company had simplified its name, to Société Parisienne pour l'Industrie Electrique (SPIE). The destruction of large parts of France's infrastructure during World War II, coupled with the rapid growth of the country's economy during the 1950s and 1960s, enabled SPIE to grow rapidly into a major presence in the country's electrical engineering sector. Yet SPIE had also entered the larger infrastructure market, gaining expertise in oil and gas pipeline construction. By the mid-1960s, the company had entered the general industrial construction market as well. In 1966, as France launched a large-scale drive to install a national grid of nuclear power generation facilities, SPIE joined in a consortium to establish Thermatome, dedicated to the engineering and installation of electric systems for the nuclear power industry.

Empain, which had regrouped its international railroad operations under the holding company Electrorail in the 1930s, had lost much of those businesses in the decolonization movement of the postwar era. The loss of these operations, which boosted SPIE's importance with the Empain group, led Empain to seek new expansion. In 1960, Empain acquired a 25 percent stake in another ailing French institution, Schneider & Co.

Schneider, founded in 1836 by brothers Adolphe and Eugène Schneider, had become one of France's leading industrial conglomerates, with a major presence in the shipbuilding industry. In the 1950s, Schneider had restructured its vast holdings into three primary businesses: CITRA (Compagnie Industrial de Travaux), which took over Schneider's construction and public works operations in 1949; SFAC, which became Creusot-Loire in 1970, grouping Schneider's steel works and related businesses; and the mining concern Droitaumont-Bruville.

The accidental death of Charles Schneider, the last of the Schneider family to hold an active role in the company's direction, threw Schneider into disarray. With its main businesses slumping, Schneider gradually came under the control of the Empain group. By the end of the decade, the two companies were merged, forming Empain-Schneider.

During that decade, Schneider had acquired a stake in SCB. In 1968, Empain-Schneider decided to merge SCB with SPIE, forming a new, internationally operating infrastructure and construction concern, Spie Batignolles. Then, in 1972, Spie Batignolles became a major force in the worldwide infrastructure market with the absorption of Empain-Schneider's CITRA unit.

Acquiring Size in the 1980s

The oil crisis of the 1970s and the resulting recession cut into Spie Batignolles' market in Europe. On the other hand, the rise in prominence of the oil-producing nations presented a new international opportunity for the company, and Spie Batignolles became a leading force in pipeline engineering and construction. In 1977, Spie Batignolles' pipeline business took on still greater prominence within the group, following the acquisition of pipeline specialist CAPAG. Founded in 1938, Capag had established itself as one of the sector's leaders, both in France and abroad.

Spie Batignolles' strong growth through the 1970s was not mirrored by Empain-Schneider. By the beginning of the 1980s, the conglomerate was struggling beneath the weight of an ill-considered diversification program, which had brought the industrial giant into such unrelated sectors as magazine publishing, ski manufacturing, and even fashion design. In 1981, the company was restructured, and the Empain family lost control of the company, which became known as Schneider. The beginning of a new crisis in the steel industry at the time encouraged Schneider in its vast restructuring, which saw it streamline itself through the 1980s and into the 1990s as an electrical sector specialist.

Spie Batignolles itself continued to expand its engineering and infrastructure activities, boosting its electrical contracting wing with the acquisition of a stake in Trindel in 1982. That company had been founded in 1923 as Travaux Industriels pour l'Electricité, as the Lorraine agency for the company Force et Lumière Electriques. Founded in 1898, that company, later known as FORCLUM, became responsible for installing a major part of France's high-tension electrical network. Trindel meanwhile diversified into other areas following World War II, adding expertise in the steel, chemicals, and petrochemicals markets, as well as in the construction of hydroelectric plants. In the 1970s, Trindel had entered the international arena, active particularly in the Middle East and Africa. Spie Batignolles acquired full control of Trindel in 1984, changing the new subsidiary's name to Spie Trindel. Over the next decade, Spie Trindel became one of Spie Batignolles' largest operations, accounting for nearly one-third of its revenues.

As its oil pipelines operations slowed at the end of the 1980s, Spie Batignolles continued to emphasize its other components, including electrical engineering and construction. In 1987, the company purchased Paris-based construction specialist Société de Construction Générale et de Produits Manufacturés. Another acquisition, in 1989, of Tondella, further consolidated Spie Batignolles' position as a leader in France's construction sector. By then, Spie Batignolles had moved to expand its electrical engineering business into the rest of Europe with the 1988 purchase of Belgium's Abay TS.

The company also returned to its roots, acquiring in 1989 the track-laying specialist Drouard, a move that helped launch Spie Batignolles into the fast-expanding high-speed train market. Spie-Drouard then became a primary component of Spie Batignolles' rail subsidiary, Spie Rail. That year, also, Spie Batignolles won a concession for the new English Channel Tunnel, supplying the electromechanical and power supply systems for the project.

By the end of the 1980s, Spie Batignolles had succeeded in refocusing its operations, as electrical engineering now accounted for roughly half of its revenues, which topped Fr 24 billion (approximately $4.5 billion). The company had also succeeded in expanding its international operations, which provided some one-third of its sales that year. The company boosted its electrical engineering operations again in 1993, when it acquired two Portugal-based companies, OELE and EVALE.

New Ownership for the New Century

Yet, with the disruptions caused by the Persian Gulf War and the plunge into a new recession at the beginning of the 1990s, Spie Batignolles began posting losses. Schneider, which was completing its reorganization as an electrical products company, began to seek to divest Spie Batignolles. Schneider attracted a number of acquisition offers, which were rejected as too low. Then in 1996, Jean Monville, then CEO of Spie Batignolles, approached the head of Schneider with the idea of a management buyout of Spie Batignolles. The buyout offer, however, extended beyond Spie Batignolles' management to include the company's entire workforce. In the end, more than 80 percent of Spie Batignolles' employees joined in the buyout, raising EUR 281 million under a new holding company, Finanicière Spie SCA.

The Spie buyout group gained a partner at the end of 1996 when it was joined by the United Kingdom's AMEC plc. Amec put up EUR 192 million for a 46 percent stake in Spie Batignolles, raising the total buyout price to EUR 350 million. The stake in Spie Batignolles fit in with AMEC's own dual strategy of gaining international scale while reorienting itself from a construction specialty to a larger engineering services group. As part of AMEC's participation agreement, AMEC gained the option to acquire 100 percent of Spie Batignolles by 2003. The buyout was completed in 1997.

Throughout the end of the 1990s and into the new decade, Spie Batignolles and AMEC tightened their relationship. Spie Batignolles itself began to focus more and more on building up its electrical engineering component to match AMEC's own push into the engineering services sector. In 1997, Spie Batignolles acquired Melotte, based in the Netherlands, strengthening its position in that country's electrical engineering market. As part of its refocusing effort, Spie Batignolles changed its name to Spie S.A., grouping its operations under three primary subsidiaries, Spie-Trindel; Spie Enertrans, for its energy and transportation sector operations; and the construction group Spie Batignolles.

Spie acquired a controlling stake in Laurent Bouillet, France's leading HVAC (heating, ventilation, and air-conditioning) specialist in 1999. That year, also, Spie turned to expanding its range of electrical engineering services, targeting the telecommunications and IT networking markets at the turn of the century, acquiring Elona, based in France, and EDS, based in Germany.

Spie's electrical engineering business continued to grow by acquisition in 2000, with the purchase of Electron, based in Breda, in the Netherlands, the second largest electrical engineering firm in that country; and two Portuguese companies, Cisec and Sometin. These acquisitions, like the Lauren Bouillet acquisition, completed in 2000, were part of Spie's reorientation as an engineering services firm.

In 2001, Spie continued to build up its telecom and IT services, acquiring Matra Nortel Communications Distribution, VDH, based in Belgium, and Export Telecom Services, which became part of a new unit, Spie Communications. Spie's acquisition drive continued into 2002, with purchases including oil industry services provider Foraid; Maintel, which specialized in providing telecommunications services to the offshore and onshore oil and gas industry, and Osiris, a provider of engineering services for the nuclear power industry.

By then, AMEC had revealed its intention to exercise its option to gain 100 percent control of Spie, a move completed in March 2003. Following the acquisition, AMEC announced a reorganization of its European holdings, creating three independently operating subsidiaries, Amec Spie, for engineering services; Amec Rail, for its railroad operations; and Spie Batignolles, which retained Spie's construction business. At that time, AMEC announced its interest in selling off Spie Batignolles, as it completed its transition into a world-leading engineering services group. Amec Spie, inheriting more than a century as a leader in the European market, promised to play a central role in AMEC's future growth.

Principal Subsidiaries: Spie Trindel; Spie Communications; Spie Energie Services; Amec Spie Rail; Spie Batignolles.

Principal Competitors: Halliburton Co.; Sumitomo Corp.; Mitsubishi Heavy Industries Ltd.; Nippon Steel Corp.; Bouygues SA; Skanska AB; VINCI SA; Taisei Corp.; Shimizu Corp.; Hochtief AG; Obayashi Corp.; Kawasaki Steel Corp.; Nippon Express Company Ltd.; AREVA; mg technologies ag; Ishikawajima-Harima Heavy Industries Company Ltd.; Colas SA; Kumagai Gumi Company Ltd.; HBG, Hollandsche Beton Groep nv; Eurovia SA; Grupo Dragados SA; Fomento de Construcciones y Contratas SA; NCC AB; Technip-Coflexip SA; Babcock Borsig AG; Balfour Beatty PLC.

Chronology

• Key Dates:
• 1836: Eugène and Adolphe Schneider found Schneider & Co.
• 1846: Ernest Gouin founds Ernest Gouin et Cie in Batignolles, France; begins building steam locomotives.
• 1847: Gouin diversifies into metal bridge construction.
• 1871: Gouin goes public and changes name to Société de Construction de Batignolles (SCB).
• 1900: Edouard Empain founds Société Parisienne pour l'Industrie des Chemins de Fer et des Tramways Electriques (SPIE), which begins working on Paris Metro project.
• 1923: SPIE expands into other infrastructure projects, building France's first high-pressure gas pipeline; Travaux Industriels pour l'Electricité (Trindel) is founded.
• 1946: SPIE changes name to Société Parisienne pour l'Industrie Electrique.
• 1949: CITRA (Compagnie Industrial de Travaux) is created as part of Schneider's reorganization.
• 1960: Empain acquires a stake in Schneider, leading to a takeover of Schneider and the formation of Empain-Schneider.
• 1968: SPIE and SCB merge to form Spie Batignolles.
• 1972: Spie Batignolles absorbs CITRA.
• 1997: Schneider sells Spie Batignolles to management buyout group and AMEC plc.
• 1998: Company changes name to Spie S.A.
• 2003: AMEC plc acquires 100 percent control of Spie, which is regrouped into three independent companies, Amec Spie, Amec Spie Rail, and Spie Batignolles.