Jarvis’s roads sale in doubt after deficit

Cracks seem to be appearing in the proposed acquisition of Jarvis’s highways business by Accord.

Reports suggest that Accord is getting cold feet over the purchase of the business, in particular Jarvis’s £270m, 20-year environmental services partnership contract for Herefordshire Council, which it was awarded in 2003.

It is understood that negotiations have broken down on the contract between Accord and Jarvis after a £2.4m deficit was found on the contract up to April this year. Reports suggest council staff have been told that talks between the two parties, at least on a local level, are now off.

Other major contractors are believed to be waiting in the wings to scoop up the contract if talks fall through.

Sources claim that the company that takes on the contract can expect losses in the first couple of years, with break-even expected in year four.

Some of the 521 council staff taken on by Jarvis under TUPE rules are worried after it emerged that there was a "significant gap" between what Jarvis was paying its staff and what Accord is prepared to pay.

Herefordshire Council leader Roger Phillips said: "Hereford-shire Council is aware that the national negotiations have experienced difficulties. In the meantime, it is business as normal in Herefordshire."

A source close to Accord believes the Herefordshire contract could be made profitable if it is "run properly" and that there is still a strong interest in Jarvis’s highways arm.

However, they admit that there are financial difficulties on the Herefordshire contract.

CJ understands that Accord has now finished due diligence on the proposed acquisition, having announced its interest in Jarvis in July. A further announcement is expected later this year.

Jarvis would not comment on the claims. Accord would not comment on negotiations with Jarvis. However, it did state it was "fully committed to TUPE regulations".