Balfour Beatty’s £380m acquisition approved

22 October 2009

Balfour Beatty’s £380m acquisition of American business Parsons Brinckerhoff is to go through after a special meeting of the latter’s shareholders approved the takeover.

In September Balfour Beatty announced that it was moving to acquire the US-based engineering, consulting, construction and support services business.

The resolution approving the acquisition was passed by the holders of over 99 per cent of Parson Brinckerhoff’s capital stock. For the deal to proceed, at least 75 per cent needed to support the move.

Balfour Beatty expects the deal to be completed by the end of October.

The takeover is being partly funded by a £353m discounted rights issue run by JP Morgan Cazenove and Hoare Govett.

Parson Brinckerhoffs’ revenue in 2008 was $2.34bn and its current order book is around $2bn. It has a network of 100 offices and employs 12,500 people.

When the intention to make the acquisition was announced, Balfour Beatty chief executive Ian Tyler said: “In particular, we believe it makes us one of the world's major players in professional services, substantially strengthens our US presence and puts Balfour Beatty in an excellent position to take advantage of increased infrastructure spending.

"It is a key step in becoming a global integrated leader in infrastructure services."

A research document commissioned by Balfour Beatty and produced by JP Morgan Cazenove suggests that the acquisition is part of the FTSE-100 company’s strategy to diversify its business away from construction towards professional services.

Cazenove predicts that post-acquisition the proportion of the group’s value which comes from construction will fall from 60 per cent to 49 per cent. Most of that shift will be accounted for by the increased importance of professional services, like consultancy, design and FM, which will account for 23 per cent of the company’s value, up from 5 per cent.