Balfour Beatty has announced the sale of its professional services division, Parsons Brinckerhoff, to Canadian engineering giant, WSP Global Inc., for a cash consideration of US$1.35bn (£820m).
The UK contractor says it will now reposition itself as "an Anglo-American infrastructure group".
The sale price assumes cash of US$110 million (£67 million) is retained within Parsons Brinckerhoff.
The sale constitutes a Class 1 transaction under the UK Listing Rules and is therefore conditional upon the approval of Balfour Beatty shareholders.Â
The transaction is also subject to certain antitrust and other approvals.Â Completion of the sale of Parsons Brinckerhoff is expected in Q4 2014.Â
Balfour Beatty said that the cash proceeds – after deductions of transaction taxes, fees and other transactional costs of approximately £50 million, together with certain separation-related costs of approximately £30 million – as follows:
- up to £200 million to be returned to shareholders;
- approximately £85 million to reduce the Group’s pension fund deficit; andÂ
- the balance to be retained by the Group to ensure a strong balance sheet and provide increased financial flexibility.
The company said its priorities now include:
- restoring the value of the UK construction business, including progressively returning it to peer group margins;
- continuing to build on the good performance of the investments and services businesses;
- leveraging the growth opportunities in US buildings, US civils, rail and power, and the Group’s Far East and Middle East Joint Ventures;
- realising further indirect overhead savings and shared service efficiencies across the Group.
Balfour Beatty said it will be repositioned as "an Anglo-American infrastructure group" focused on construction, services and investments.
Steve Marshall, Executive Chairman of Balfour Beatty said: "The Board believes that the sale price of £820 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.Â
"The sale of Parsons Brinckerhoff follows the recent revaluation of our investments portfolio, which underlines the potential of this division to create value internally and across the Group. 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.Â Â
"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."