Balfour Beatty shareholders agree sale of Parsons Brinckerhoff to WSP

Balfour Beatty’s shareholders have voted overwhelmingly in favour of the sale of Parsons Brinckerhoff to WSP.

Jackie Whitelaw
28 October 2014

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93% voted in favour of the deal to sell the consultant for £820M. Completion of the transaction is “expected shortly” Balfour Beatty said.

Executive Chairman Steve Marshall said: “This sale represents a significant return on Balfour Beatty’s investment and a compelling level of value creation for shareholders. Balfour Beatty is now a simpler, stronger and more focused business, and with Leo Quinn joining as new CEO in the New Year the business is well positioned for the future as the construction and infrastructure markets develop.”

Marshall had explained to shareholders that the sale was needed to help avoid risk of a breach of banking covenants.  Mitigation measures if the sale had not been approved could have involved a quick sale of PPP investments and cancelling of shareholder dividends. It follows a series of profit warning that have hit the contractor for £190M largely due to problems in its Construction Services business.

Initial expectations when the deal was first agreed in September was that it will complete by  Christmas. The combined business with Parsons Brinckerhoff will be one of the largest global pure-play professional services firms in its industry, with approximately 31,000 employees across the world with pro forma combined net revenues of £2.3bn for the twelve-month period ended June 28, 2014.

WSP estimates that £15M of cost savings can be achieved from the combined businesses with the first 24 months "without considering any restructuring, integration expenses and transaction related costs" with half of  these savings achieved in the first year.

Balfour Beatty bought Parsons Brinckerhoff in 2009 for £380M and the business has been at the centre of a serious tussle between Balfour and Carillion during the recent  failed merger talks with Carillion wanting to keep PB  and Balfour determined to sell. After the PB cash consideration, fees, transaction and other costs it has pretty much doubled its money in five years.