Balfour Beatty bags £53m profit after selling stake in M25

Infrastructure giant Balfour Beatty has today announced a £103m deal to sell a significant stake in the company that operates the M25.

Balfour Beatty has lifted its 2017 profit expectations with the £53m profit from the sale of a 12.5% stake in Connect Plus to Dalmore Capital, the company which operates the M25 orbital motorway. The deal has been signed off by the Highways Agency and Balfour Beatty expect it to be completed before the end of the year. The proceeds from the transaction will be used to pay down borrowings in 2018. Balfour will continue to hold a 27.5% stake in Connect Plus.

Leo Quinn, group chief executive, said: “This transaction emphasises the ongoing attractiveness of our infrastructure assets and is in line with our declared intent to maximise value for shareholders.”

Numis analyst Howard Seymour said the sale is a positive step for two reasons. He added: "Firstly, realising a figure above directors' valuation (and 25% ahead of what Skanska achieved) demonstrates further the excellent track record and group strategy for selling mature assets and that inherent value remains - notably as post the sale, DV will still be circa £1.1bn/60% of market capitalisation.

"Second, the likely use of sales proceeds to pay down gross debt in our view provides the group with the best balance sheet in the sector. Together with management actions to date this puts Balfour Beatty in prime position in the UK and US to exploit strong market outlooks. We retain target price and view that Balfour Beatty offers the best recovery profile coupled with balance sheet in the sector, making it a top pick going into 2018."

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