Canadian consulting engineer WSP has completed its purchase of Parsons Brinckerhoff, Balfour Beatty’s former professional services arm, for $1.3bn in cash.Â
The merger has created one of the largest multidisciplinary firms in the world, with a combined revenue of $4.8bn and 31,500 employees in 500 offices across 39 countries. It follows Aecom’s $4bn purchase of fellow American firm URS, and establishes a trend for consolidation in the engineering design sector.Â Â
The deal was considered essential to the financial health of Balfour, which paid $80m in fees and tax as well as "separation-related costs" of $48m. The firm has promised to return $320m of its proceeds to shareholders through a share buyback programme; a further $136m will be used to reduce the group’s pension fund deficit and the remainder will shore up the contractor’s balance sheet.Â
Pierre Shoiry, the president and chief executive of WSP, said: "We will now focus on merging our respective businesses and on generating revenue synergies. In the rail sector we see an opportunity to combine WSP’s expertise in above-ground station and platform design with Parsons Brinckerhoff’s expertise in tunnelling and underground technology. In the aviation sector our expertise in landside and airside are complementary."Â
Steve Marshall, Balfour Beatty’s executive chairman, said: "This sale represents a significant return on Balfour Beatty’s investment and a compelling level of value creation for shareholders. Following the sale, Balfour Beatty will be a simplified and more focused group."Â Â Â
The sale of Parsons Brinckerhoff was a deciding factor in the breakdown of talks between Balfour Beatty and Carillion in September. Balfour warned of dire consequences if the Parsons deal fell through.