Sale to sector newcomer will make no any difference to customers, says consultant
Housing consultant Hacas Chapman Hendy will retain its staff and brand identity in the wake of its 拢45.1m takeover by Tribal Group.

Derek Joseph, Hacas' managing director, said: "Our operations will not be interfered with, our consultants will still do the same job with the same customers. However, this gives us the chance to bid for bigger cross-sector contracts, the kind of thing we haven't been able to bid for before."

The directors of Tribal and Hacas thrashed out the deal in an all-night meeting that ended at 5am last Thursday morning. Tribal, the 1500-strong public-sector specialist consultant, has bought more than 30 companies in the past three years.

The bid depends on the approval of Hacas shareholders, who control 30% of the firm. Under company law, 90% of these private shareholders have to vote in favour or the offer is dropped.

Tribal has always headed the list of bidders tipped to buy Hacas, and last month it was revealed that it had negotiated a 拢100m credit facility with its lenders in order to fund acquisitions (HT 13 June, page 10).

Tribal, which is listed on the London stock exchange, will pay for Hacas with 拢30.7m in cash and the rest in group shares. Shares in both companies fell on the announcement, with Hacas down 6% to 139p by midday on Wednesday, and Tribal down 7% to 321p.

Joseph denied that the deal would solidify Hacas' dominance of the sector, saying: "If we're going to provide the range of services our clients want, we have to be this size. People like us to be small but they also want the skills 鈥� we can't be all things to all people."

Henry Pitman, chief executive of Tribal Group, said he was delighted with the deal: "This is a business we've known for some years and one that fits in extraordinarily well with our own. We are now the leading management consultancy in the public sector."

He added that Tribal had other regeneration companies in its sights this year. The 拢45.1m Hacas deal, if it goes through, leaves the firm with a 拢50m war chest to fund purchases.

James Tickell, deputy chief executive of the National Housing Federation, said of the deal: "We're hoping that [Hacas] will continue very much as a separate entity. [However], the sector will be nervous that the unique character of the business will be lost."

Analysis: A young company with a thoroughbred pedigree

鈥淚t鈥檚 a good company, with dynamic young management. Currently, it鈥檚 motoring at a hell of a rate.鈥� This is the City verdict on Tribal Group 鈥� courtesy of Stan Patey, chief executive of financial adviser Capital Strategies. Hacas is the 35th company to come under the Tribal umbrella since it was founded by chief executive Henry Pitman in March 1999. If the deal goes through, it will bring the public sector consultant鈥檚 spending up to nearly 拢200m. This ambitious spree has left it with 1500 staff across businesses including management consulting, human resources, recruitment, IT outsourcing, public relations and architecture 鈥� with the public sector as the common focus. About 150 people work in its consulting arm 鈥� a similar number work for Hacas. Tribal now claims it is the leading public sector consultant, able to fight on an even footing with the big accountancy firms. A widespread concern in the housing sector 鈥� where Hacas does the lion鈥檚 share of consultancy work 鈥� is that Tribal will overhaul the structure of its latest acquisition. However, in the past, Tribal has given most of its acquisitions a high degree of autonomy. Essentially, despite having new revenue targets to achieve, Hacas will be undisturbed. Hector Forsythe, analyst for equity analyst Evolution Beeson Gregory, said Tribal had a good track record: 鈥淚t doesn鈥檛 fiddle with the businesses it buys. It doesn鈥檛 go in and tell them how to run their business.鈥� Two years on from the company鈥檚 first foray into the housing sector 鈥� the purchase of management consultancy Austin Mayhead 鈥� the firm still has its own brand and its independence. This week, Tribal also announced profit of 拢15.4m, up 90% on the previous year, and revenue of 拢106m, more than double the figure for 2002. As far as the City is concerned, the only cloud on the horizon is that Tribal has few long-term contracts and limited trading history.

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