Speculation is mounting that UGL, the global engineering, infrastructure, maintenance and property services company will separate from its property and engineering operations division, which includes DTZ – a property and facilities management company it bought in December 2011.
The speculation follows UGL’s announcement that it has appointed Goldman Sachs to advise the company on a review of the structure of its property services business and engineering operations following the significant growth in these divisions. Its property business now represents close to 50 per cent of the company’s earnings and demonstrates the potential to stand on its own as a seperate company with its own shareholders and stock market listing.
UGL’s says its acquisition of the trading operations of DTZ Holdings plc in December 2011, transformed its property business into an integrated end-to-end property services provider across all key geographic regions. The billion-dollar division outperformed initial expectations after scooping a number of new key global contracts with various iconic multinational corporations, leading to the establishment a global headquarters for DTZ in Los Angeles.
Various alternatives from maintaining the current corporate structure, reviewing a potential structural separation or demerger of the company, as well as UGL’s M&A strategy will be considered. UGL managing director & CEO, Richard Leupen, explained:
“Over the last decade, UGL’s Engineering businesses have become market leaders in engineering construction and maintenance services across key sectors in Australia, employing 8,000 people and generating annual revenue in excess of $2.5 billion.
“Our Property business has grown significantly from the initial acquisition of KFPW in 2002 through to the acquisition of the trading operations of DTZ Holdings plc in 2011, to become a global leader in property services operating in 52 countries, employing 47,000 people worldwide and generating annual revenue of $2.0 billion. Organic growth has also been a key driver of the growth in our Property business.
“Given the substantial scale both businesses have now reached, it is the right time to review UGL’s corporate structure to fully capitalise on the strong growth opportunities across the engineering and property services sectors,” Mr Leupen said.
UGL’s board has agreed that current Managing Director and CEO, Richard Leupen will deliver the review and execute its recommendations and outcomes. The firm expects to provide an update on the review by the announcement of its full year results on 12 August 2013, if not earlier.