ECONOMY

160 out of 748 building firms survive mergers

Construction group AEGEK announced yesterday it will buy out four construction companies in order to qualify for new guidelines to bid for major public works projects. This is quite likely the last in a spate of mergers prompted by the fact that the government has set a January 31 deadline for construction companies to qualify for new guidelines it has set for government contracts. Other firms were trying hard to beat yesterday afternoon’s deadline, but it is doubtful that such hasty mergers would withstand careful scrutiny. Because of the late rush, Deputy Minister for Public Works Yiannis Tsaklidis yesterday declined to provide an official list of merged firms. He said, however, that the new regulations would help create strong construction groups, able to compete beyond Greece’s borders. The mergers were exactly what the government intended. Government officials had recently said that Greek construction groups – with a few exceptions – were too weak to compete on their own and were obliged to become small players in foreign-led consortiums. Newly appointed Environment and Public Works Minister Vasso Papandreou had said, earlier this month, that the completion of all infrastructure projects related to the 2004 Athens Olympics was beyond the capacity of Greece’s construction sector. It will take the Environment and Public Works Ministry three months to go through the submitted files announcing the mergers. The new companies will then have to be registered by September 30. Following the current round of mergers, only 160 construction companies out of 748 will remain. AEGEK said in a statement that it will buy Domitor, Oikodomiki, Odosimansi and Axon for an undisclosed amount. Following the acquisitions, AEGEK’s order book will reach 350 million euros and the company said it will expect pretax profit in 2002 of about 16 million euros on turnover of 180 million euros. Only construction firms with the highest grade of seven will be eligible to bid for large public projects, according to recent legislation, which abolished the old eight-grade system. According to preliminary data, no more than 12 or 13 firms will be awarded the highest grade. Of the 59 firms currently holding in grade eight, 25 have asked to be reclassified grade six or lower. Those were the ones who failed in their quest to form groups strong enough to bid for large public projects. AEGEK also said that group member Efklidis will also buy six construction companies and that its order book after the acquisitions will reach 250 million euros. The newly formed company expects pretax profit of 12 million euros in 2002 on turnover of 170 million euros. AEGEK added that Ekter, in which it holds a 46-percent stake, will also buy two construction companies but did not disclose the amounts involved.