BBA sells brakes division for £389m

BBA sold its car brake pads business for £389m to HSBC Private Equity yesterday. The engineering company said it would use the proceeds, of £269.7m in cash and £119.5m in loan notes, to pay down debt and fund acquisitions.

BBA sold its car brake pads business for £389m to HSBC Private Equity yesterday. The engineering company said it would use the proceeds, of £269.7m in cash and £119.5m in loan notes, to pay down debt and fund acquisitions.

"The friction unit was probably the most mature of the BBA businesses. Selling it will help the company to raise funds for acquisitions," said Simon Fenwick, an analyst at BNP Paribas.

BBA, which has raised £1bn through a disposal programme launched in 1994, is looking to focus on aviation services and material technology. "The company has reduced the number of its divisions from seven to two, as part of its move from engineering to services oriented, high-growth businesses," BBA said. Organic growth at the friction division was only 4.5 per cent last year, while it rose 8 per cent in the aviation services division and by 7 per cent in the non-woven materials division.

BBA's share price, which along with other engineering stocks, has underperformed the market this year, yesterday rose 20p to close at 456p.

"The pre-tax profit last year grew by 11 per cent and will remain sustainable for the coming three years. This means BBA's performance will depend on its organic growth, and its exposure to the economic cycles will be reduced," Mr Fenwick said.