13th Aug 2021 08:32
(Alliance News) - Babcock International Group PLC on Friday said it has agreed to sell its Frazer-Nash Consultancy business for GBP293 million in cash.
The London-based defence contractor is cutting non-core assets as part of a strategy announced in April, by which it will focus on aerospace, defence and security in an attempt to turn around years of underperformance. The strategy targeted at least GBP400 million in disposals over 12 months.
Cash from the sale will be used to pay off debt, Babcock said. The company's net debt was GBP1.35 billion as of March 31.
Shares in Babcock were up 6.4% to 326.30 pence in London on Friday morning, making it the best performer in the FTSE 250 index.
Engineering and technology consultant Frazer-Nash has operated largely independently from the parent company since it was acquired in 2007, Babcock said. It made revenue of GBP100.5 million and profit before interest and tax of GBP13.5 million in the year ended March 31.
The buyer, KBR Inc, is a Houston-based military contractor. The deal is subject to approval from the Australian foreign investment authority.
"We are making real progress on our plan to streamline and focus the group on our key markets. Divesting at least GBP400 million of businesses in our targeted disposals programme will enable us to reduce complexity and increase our focus as we return Babcock to strength," said Chief Executive Officer David Lockwood.
By Ivan Edwards; [email protected]
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