Balfour Beatty to buy US project group for $626m

Friendly takeover of Parsons Brinckerhoff to be financed by rights issue

Balfour Beatty announced it is buying the US professional services business Parsons Brinckerhoff in a $626m (£380m) friendly takeover yesterday, which it plans to finance through a £353m cash call.

There has been speculation for a number of days that the construction and engineering group would ask investors for money as it seeks to extend its overseas and project management businesses. The deal, which is subject to shareholder approval, will be paid for by a £353m, three-for-seven rights issue, to be priced at 180p. The rights come at a 46.8 per cent discount of the stock's closing price on Wednesday. Balfour Beatty's shares yesterday closed up 7.9 per cent, at 371.3p.

"The deal fits the strategy we announced three years ago. Balfour Beatty is strong in its core businesses, but our infrastructure customers require us to offer a greater range of services," said Ian Tyler, Balfour Beatty's chief executive. "Being a market leader in the US civil infrastructure, transportation and power markets, buying Parsons Brinckerhoff is a transformation deal in this respect."

Professional services – a range of activities including maintenance services and project management – is in vogue as construction and contractor groups look to generate maximum revenues from their projects.

Mr Tyler ruled out any job losses as a result of the deal, insisting that the takeover was about growth. The announcement was welcomed by analysts, although some did warn that there is a risk that key people at Parsons Brinckerhoff may leave the combined company. "Buying professional services is about people, and people can walk out of the door, particularly if they don't want to work for a contractor," said Andy Brown, an analyst at Panmure Gordon.

"This does look like a good fit for the company, however. Parsons will allow Balfour Beatty to offer clients more of an end-to-end product, and it also fits in with what is happening in the US, especially in relation to the Obama stimulus plan."

The rights issue will be underwritten by JP Morgan Cazenove, RBS Hoare Govett and Citigroup. "I don't think there will be any problems with getting the rights issue away. Why would investors not buy at 180p when the stock is trading around the 370p mark?" said Mr Brown.

Parsons Brinckerhoff is an employee-owned group, which makes it harder to value. However, industry watchers said that the £380m price tag looked reasonable. "It looks like they are paying close to six times historic earnings," said Andy Gibb of Oriel Securities. "This does not look overly aggressive, although the deal is not earnings enhancing until 2011, so we will be looking to see if the group can find any synergies before then."

Last year, New York-based Parsons Brinckerhoff recorded revenues of $2.34bn. As well as its US operations, it also operates in the UK and Asia, giving Balfour Beatty a profile in India, China and Australia for the first time.

News
John Travolta is a qualified airline captain and employed the pilot with his company, Alto
people'That was the lowest I’d ever felt'
Life and Style
healthIt isn’t greasy. It doesn’t smell. And moreover, it costs nothing
News
i100

Other places that have held independence referendums
Arts and Entertainment
Jack Huston is the new Ben-Hur
film

It scooped up an unprecedented 11 Academy Awards when it was first remade in 1959

PROMOTED VIDEO
Arts and Entertainment
Pharrell dismissed the controversy surrounding
musicThe singer said 'the last thing I want to do is degrade'
News
news

Arts and Entertainment
Blossoming love: Colin Firth as Stanley and Emma Stone as Sophie, in 'Magic in the Moonlight'
film

Actors star in Woody Allen's 'Magic in the Moonlight'

News
A male driver reverses his Vauxhall Astra from a tow truck
newsThe 'extremely dangerous' attempt to avoid being impounded has been heavily criticised
News
peopleThe Times of India said actress should treat it as a 'compliment'
Arts and Entertainment
Maxine Peake plays Hamlet at Manchester's Royal Exchange
theatreReview: Maxine Peake brings emotional ferocity to Shakespeare's starring part
News
ebooksAn unforgettable anthology of contemporary reportage
News
news

Watch this commuter wage a one-man war against the Circle Line
Property
Home body: Badger stays safe indoors
lifeShould we feel guilty about keeping cats inside?
Life and Style
fashion

Olympic diver has made his modelling debut for Adidas

Travel
travel

...and the perfect time to visit them

Sport
Jonas Gutierrez (r) competes with Yaya Toure (l)
football

Newcastle winger reveals he has testicular cancer - and is losing his trademark long hair as a result

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Recruitment Consultant - Soho - IT, Pharma, Public Sector

£20000 - £25000 per annum + OTE £35,000 first year: SThree: The SThree group i...

Sales Executive

£20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

Payroll & Accounts Assistant

£20 - 24k + Benefits: Guru Careers: This is a great opportunity for an enthusi...

Day In a Page

Mystery of the Ground Zero wedding photo

A shot in the dark

Mystery of the wedding photo from Ground Zero
His life, the universe and everything

His life, the universe and everything

New biography sheds light on comic genius of Douglas Adams
Save us from small screen superheroes

Save us from small screen superheroes

Shows like Agents of S.H.I.E.L.D are little more than marketing tools
Reach for the skies

Reach for the skies

From pools to football pitches, rooftop living is looking up
These are the 12 best hotel spas in the UK

12 best hotel spas in the UK

Some hotels go all out on facilities; others stand out for the sheer quality of treatments
These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

Widespread fear of Isis is producing strange bedfellows

Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
Topshop goes part Athena poster, part last spring Prada

Topshop goes part Athena poster, part last spring Prada

Shoppers don't come to Topshop for the unique
How to make a Lego masterpiece

How to make a Lego masterpiece

Toy breaks out of the nursery and heads for the gallery
Meet the ‘Endies’ – city dwellers who are too poor to have fun

Meet the ‘Endies’ – city dwellers who are too poor to have fun

Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

Ian Paisley’s decision to make peace with his IRA enemies

His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

Exclusive extract from Janis Winehouse's poignant new memoir
Is this the role to win Cumberbatch an Oscar?

Is this the role to win Cumberbatch an Oscar?

The Imitation Game, film review
England and Roy Hodgson take a joint step towards redemption in Basel

England and Hodgson take a joint step towards redemption

Welbeck double puts England on the road to Euro 2016
Relatives fight over Vivian Maier’s rare photos

Relatives fight over Vivian Maier’s rare photos

Pictures removed from public view as courts decide ownership
‘Fashion has to be fun. It’s a big business, not a cure for cancer’

‘Fashion has to be fun. It’s a big business, not a cure for cancer’

Donatella Versace at New York Fashion Week