PhillyDeals: Builder with towering local profile sold

L.F. Driscoll Co., the 80-year-old Bala Cynwyd builders who put up One Liberty Place, Comcast Center, the Kimmel Center, and other Philadelphia landmarks, has been sold to Structure Tone, of New York.

"We saw the Driscoll folks as the leading firm in Philadelphia, and a strong entity in the health-care market," one of the few sectors where builders are still busy, Bob Mullen, chief executive at Structure Tone, told me.

Driscoll has constructed recent buildings for the Penn and Jefferson hospital systems and Children's Hospital of Philadelphia, among others, Mullen said.

"We could absolutely have stayed independent. This was not done for purely financial reasons," Jack Donnelly, chief executive at Driscoll, said. "We'll run independently, and now we can expand our markets. We can take advantage of the fact [Structure Tone] is national in scope. It will mean a bigger pipeline" of new projects as Philadelphia-area deals have slowed.

The deal follows the sale of rival Philadelphia contractor Keating Building Corp. to Perini Corp., of Massachusetts, last winter, and of Center City architecture-design firm Granary Associates to Stantec, of Canada, last week.

"The construction industry is becoming an industry of giants - global giants, multi-billion-dollar giants," observed David Richter, president of Hill International Inc., a Marlton-based multinational construction project manager.

It's been hard for regional firms to buy construction insurance bonds, or bid for jobs in booming foreign markets, Richter told me. "You're going to see a lot of contractors go under," or get sold, he predicted.

Donnelly and his colleagues led a management buyout of the firm in 1994; members of the founding Driscoll family remained as minority owners until the sale. Buyer Mullen said Donnelly and his staff will keep their jobs.

Structure Tone is well known for office interior construction, while Driscoll puts up building "shells" and high-rises, said John Gattuso, regional director of Philadelphia-based Liberty Property Trust, a national office landlord that hired Driscoll to build Comcast Center, the city's highest tower.

Gattuso said the sale was good for Liberty, which has worked closely with Driscoll near its home office. Now, "the combination [can] travel with us to other sections, like the D.C. area," he added.

Structure Tone has about 1,100 employees in New York, Florida, Texas, Britain, and China, and $3 billion in sales last year. Driscoll employs 160 and has averaged $500 million in annual sales over the past three years, Mullen said.

The firms wouldn't say what Structure Tone paid for Driscoll. "Contractors generally get sold for 20 to 30 percent of revenue," but that varies "depending on profitability and balance sheet and backlog," said Richter.

Specialized contractors sometimes attract higher prices, said Andy Greenberg, citing data collected by his firm, GF Data Resources, of West Conshohocken, which tracks private-company sales.

Structure Tone serves national clients such as Citigroup, Deloitte, and Thomson Reuters.

Mullen said Donnelly was already looking for partners when the two first got together at an Eagles game last year. Now, united, "we want to be best-positioned for when the market turns around, in a year or so," Mullen said.

I asked Hill's Richter about his firm's proposed American Commerce Center tower, which would pass Comcast to be the tallest in Philadelphia, if it's built.

"Glaxo [GlaxoSmithKline] is still our most likely lead tenant, and I think we're moving closer to a deal with them," he told me. "My guess is we'll have the project moving forward in the second quarter of 2010." Though, he added, it takes time to get commitments from an "anchor tenant" whose existing leases won't expire for a few years.

Sovereign Bank has cut hours, downgraded full-time branch employees into part-timers, and reassigned workers from particular offices so they can be called into any one of several offices as needed, at Philadelphia-area branches, starting this week.

I called Ellen Molle, spokeswoman for Sovereign at the Banco Santander unit's Boston headquarters, to ask about the changes. She answered with a note:

"We conducted a teller-line customer service study earlier this year, and looked at customer wait times, queue lengths, and service times. Based on the survey, we made some changes to match our teller schedules more closely with customer traffic patterns.

"We have been testing the changes in some branches across our footprint, and in our testing we found these changes have no material customer impact."

Molle also says "the new service model will improve our efficiency and enable us to provide customers with the right level of service at the right time."

Metro Philadelphia is a competitive bank market. Can Sovereign add by cutting?