PB said to be talking with five suitors while Mouchel considers float or sale

The URS/AECOM sale announced this week, while the biggest we are likely to see for many a summer, is not the only consultancy business negotiation underway.

Jackie Whitelaw
16 July 2014

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Latest information on Balfour Beatty’s sale of Parsons Brinckerhoff suggests the firm is considering the merits of five suitors and will have selected one to pursue for a potential marriage by the end of this month. Rumours are circulating of a circa £600M price tag.

And Mouchel, which took itself off the (stock) market in 2012, and is currently owned by its banks and some management interest, has, according to reports, hired merchant bank Rothschild to advise it on its next move. This could imply that the company is considering relisting or that it has had serious offers for a  trade sale. Suggestions are that the business is currently valued at £500M.

Balfour Beatty put Parsons Brinckerhoff on the market in May when it announced a profit warning of £30M in its Construction Services Division.

In the five years since Balfour Beatty bought the business for £380M, it struggled to properly integrate it into the company. “PB has grown and been successful in its own right but it hasn’t delivered any material competitive advantage for the group” BB Construction Services chief executive Nick Pollard said at the time. 

“It is a fact that some customers prefer a different model to this one stop shop,” he added. “The group has quite correctly identified that PB has market value. But if the business does not attract significant value then we would not sell it.”

In 2013 PB contributed 16% to Balfour Beatty’s revenue at £1.7bn but 28.9% of profit at £54M.

Mouchel rejected a £330M takeover bid from the former VT Group in 2010 as well as offers of £150M the year after from rivals Costain and Interserve, claiming they undervalued it. A series of profit warnings and management resignations followed until the firm put itself into administration in 2012 with the business re-emerging as an organisation owned by its banks and management.

Since then the company has turned itself around. In 2013 the group reported pretax profits of 16.6M on a turnover of £555.3M. For the half year to the end of March this year, turnover was £300.5M and pretax profit £8.3M.