4th Sep 2014 05:50
LONDON (Alliance News) - Balfour Beatty PLC Thursday said it has sold its US project management business Parsons Brinckerhoff to WSP Global Inc for GBP820 million in cash, a good return on the roughly GBP380 million it bought the business for in 2009 and more than analysts had expected.
Parsons Brinckerhoff proved the key stumbling block to a failed merger approach by rival Carillion PLC, after Carillion's attempts to stop the sale were rejected by Balfour.
Analysts had put a price tag of up to GBP650 million on Parson Brinckerhoff.
In a statement, Balfour said the deal to sell the business also assumes GBP67 million of cash is retained within Parsons Brinckerhoff. The British company will book about GBP50 million of costs for transaction fees and taxes, and separation-related costs of about GBP30 million.
It said it will return up to GBP200 million of the proceeds to shareholders, use about GBP85 million to reduce its pension fund deficit, and retain the rest to strengthen its balance sheet and give it more financial flexibility.
?The board believes that the sale price of GBP820 million delivers both a significant return on our original investment and a compelling level of value creation for shareholders - which remains the key focus of the board," Balfour Beatty Chairman Steve Marshall said.
The sale price, minus the retained cash, represents 11 times 2013 underlying earnings before interest, tax, depreciation and amortisation, Balfour said.
Balfour is now going to focus on its construction businesses in the US and UK, its investments business, its services division consisting of a number of specialist construction and asset management businesses, and construction joint ventures in the Far East and Middle East.
"In the US, our core construction business is well positioned in a recovering market. In the UK we see the potential for margins to progressively recover to peer group levels. Our services business, meanwhile, is well placed to benefit from the growing investment in infrastructure. Together, these elements will provide a strong foundation for an incoming Group CEO to take the company forward," Marshall said.
By Steve McGrath; [email protected]; @stevemcgrath1
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