M&A and Corporate Baggage

CH2M Hill, one of the world's leading engineering, construction and logistics firms, is no stranger to mopping up big messes.

The Englewood, Colorado, company, founded in 1946, specializes in water treatment, environmental cleanup and industrial decontamination. That experience might well come in handy in light of recent events involving its latest acquisition: VECO Corp.

F.B.I. and I.R.S. agents on Monday raided the home of Senator Ted Stevens, the Alaska Republican who is under scrutiny in a criminal corruption investigation.

They are particularly interested in the senator's long and profitable relationship with Veco, an Alaskan oilfield services company that also specializes in doing contracting work for the federal government.

Stevens' problems began when he allegedly paid for a renovation that doubled the size of his home with money that had passed through VECO, which at the time was run by his good friend Bill J. Allen.

The home renovation, and its ties to VECO, struck Federal investigators because Allen was also a consistent large-scale contributor to Stevens' Senatorial campaigns over the years. At least he was before he pleaded guilty in early May to charges that he and other VECO executives bribed Alaska state legislators.

Stevens's worsening troubles aside, the problem for CH2M Hill is that, in mid-June, it announced it planned to buy VECO for $365 million.

CH2M Hill representatives shrug off the recent events involving Stevens and the former Veco executives. They say the controversy will not affect the pending takeover or Hill's apparently unshakable affinity for VECO.

"We feel that this issue ... of the few folks at the very top that were indicted from VECO, is isolated at the very top and it has nothing to do with the outstanding company or exceptional workforce," CH2M Hill spokesman John Corsi said.

"The deal's not done, we're still in the 'due diligence' process," he noted, before quickly adding: "We don't believe this investigation impacts our due diligence process or the acquisition."

Still, all this goes to show that when you buy a company, you buy all of its baggage. Hill seems adamant that recent events in Alaska will not affect its acquisition plans, though the troubles out West might well give it some pause.

In any case, they give CH2M Hill a brand new mess to clean up.

by David Levine