Contracting giant Balfour Beatty has stunned the City by confirming it will buy giant US consultant Parsons Brinckerhoff for £380M.
Chairman of the Board of PB, James L. Lammie told staff: “Balfour Beatty has agreed that Parsons Brinckerhoff will retain its name and organizational structure and operate as an independent but wholly-owned subsidiary. We believe this will allow us to continue to meet our clients’ needs in ways they expect while expanding into new areas that will provide additional opportunities for our employees.”
This morning, Balfour Beatty confirmed that it would be issuing a 3 for 7 shares rights issue to raise £353M to complete the deal.
Balfour Beatty chief executive, Ian Tyler said: “The acquisition of Parsons Brinckerhoff represents the realisation of a number of key strategic objectives for Balfour Beatty. 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.”
Parsons Brinckerhoff turned over $2.34bn in the year ending 31 October 2008 and has 12,500 employeed in more than 100 offices worldwide.
The move will significantly enhance the contractor’s US presence and develop the firm’s professional services business.
Parsons Brinckerhoff’s chief executive Keith Hawksworth said: “We are delighted to be joining the Balfour Beatty Group. We believe there is a clear fit between our two closely-aligned companies. We are very enthusiastic about what we see as the enormous potential that can be realised by working together in the future.”
To raise the cash, qualifying Balfour Beatty shareholders will be offered 3 new shares for every 7 existing shares held at close of business on 16 September 2009 at a price of 180p per new share, a 46.8% discount to the closing middle market price of 344p per ordinary share.
Balfours said in its statement: “The Board believes that the Enlarged Group will have enhanced long-term growth potential through its leading position in the international markets for infrastructure services and from increased infrastructure spending in both developed and emerging markets.
“Adding Parsons Brinckerhoff’s successful and well-established international professional services business to Balfour Beatty’s very significant construction, existing professional services and investment businesses will create a group with significantly enhanced capabilities to address the needs of key infrastructure customers internationally.
“The Enlarged Group will have a presence across the entire life cycle of major infrastructure assets - from conception and funding to construction, operation and maintenance. This will enable the Enlarged Group to provide customers with a comprehensive range of services relevant to all stages of infrastructure asset development and to operate in a wider range of geographies.
“Additionally, the Board believes that the trend of major infrastructure owners increasingly looking for an integrated service approach from their key partners and suppliers will continue in the future, providing increasingly favourable market dynamics for the Enlarged Group,” it reads.