Morrison looks at possible buy back

Sir Sir Fraser Morrison and his brother Gordon are considering buying back at least part of Morrison construction group, which was sold last year to AWG for £263 million sterling.

The company has become heavily involved in property developments on both sides of the Irish border. It is a joint developer with Woodford Developments of a huge apartment scheme at Santry in Dublin and is due to take a 50 per cent stake in a hotel and shopping scheme at the junction of Parnell Street and Moore Street in Dublin city centre.

AWG said last week that it was considering legal action over the sale, after it uncovered unexpected losses on six contracts awarded to Morrison. Gordon Morrison resigned from AWG just before it announced that it had written down the "fair value" of Morrison by some £22.9 million to reflect the losses. The purchase was a key element in AWG's strategy to diversify from its UK water business, which last year was hit by the price cuts imposed by Ofwat, the water regulator.

Sir Fraser Morrison and his brother each received £57 million in cash and shares for their 21.7 per cent stakes.

The family is understood to be considering whether to buy back the construction interests, leaving AWG with Morrison's former facilities management interests, which include contracts to run part of the national gas pipe network and telecom networks in Yorkshire.

AWG is particularly keen to expand its management of utility assets and operations including those for other water companies. Chris Mellor, AWG chief executive, has faced criticism from some shareholders disappointed with the progress of the acquisition.

He said : "We have received no offer for any part of the group. Should an offer emerge, it would be considered in the normal way, but would have to enhance shareholder value to have any chance.

"At this point we have no plans to sell any of our businesses with which we remain very happy." Analysts said that it would be very difficult to place a value on the construction business alone.

Five of the loss-making contracts have been completed and a sixth will reach completion shortly.

It would not be the first time the Morrison family has bought back the business, which was founded by Sir Fraser's father in 1948.

The company sold to Charter Consolidated in the mid-1970s was bought back in 1989. Sir Fraser has reacted angrily to reports that AWG was considering legal action.

"At the time of the purchase, AWG decided that, despite my knowledge and experience of building the business over nearly 30 years, that they did not wish to retain me in an executive capacity," he said. "Prior to the offer being made, AWG carried out a process of due diligence and decided to proceed."