Chinese contractors are making waves in the U.K. as speculation spreads from a June 7 media report of a potential Beijing bid for London-based Balfour Beatty PLC. Quoted sources, who were not identified, said the deal could be valued at up to $3 billion.
Across the Atlantic, a Canadian publication last week said Montreal-based contracting giant SNC-Lavalin is being eyed for acquisition by Spain’s Actividades de Construcción y Servicios SA (ACS) and Australia-based WorleyParsons Ltd. The report, whch cited "sources familiar with the events," did not reveal a purchase price.
Balfour Beatty declines to comment on stories emanating from a UK newspaper’s June 7 report that China Civil Engineering Construction Corp. (CCECC) is pondering the offer. Observers note the lack of any hard information backing the story, but the possibility of such a bid is not being ruled out.
The suggestion comes as the U.K. firm begins to recover from a torrid period of multiple profit warnings related to home market operations and the resignation last year of its CEO, Andrew McNaughton.
In an update last month, new CEO Leo Quinn, who joined in late 2014, reported progress on the company’s “Build to Last” transformation program launched in February. “I continue to believe all our operations should achieve industry-standard performance against what appears to be a beneficial market environment,” he noted.
With sales exceeding $13 billion in 2014, Balfour Beatty is more than six times larger than CCECC, which ranks at No. 71 on ENR’s Top 250 International Contractors list. Virtually all of its reported sales last year were outside China.
Whether or not CCECC actually buys into the UK market, its compatriot contractor China Harbour Engineering Co. Ltd last week secured a firm foothold by becoming preferred bidder on $460 million of marine works on the world’s first tidal lagoon power plant in Swansea Bay, Wales.
The lagoon contract forms “the cornerstone project in our business development strategy in the U.K. and wider Europe,” according to China Harbour President and CEO Lin Yi Chong.
“We will seek to grow our U.K. presence through significant investment into a subsidiary business” and through infrastructure investment and construction there.
As well as clinching work on the lagoon’s 9.5-km rock and earth enclosure, China Harbour pencilled a deal with Tidal Lagoon Power Ltd., owner of the Swansea project, to develop similar tidal power projects in Asia.
Tidal aims to start construction in Swansea Bay next spring, but must first secure two final official approvals and power agreements, possibly by this year’s end.
The lagoon contract follows the entry into the U.K. of Beijing-based real estate developer Dalian Wanda Group, reportedly making its first foreign foray.
The company is investing in a $1.4-billion London development, which includes over 100,000 sq m of residential, retail and hotel space. China State Construction Engineering Corp is in the joint venture to build the project.
All these deals, however, would be dwarfed by the potential involvement of China General Nuclear Corp. and China National Nuclear Corp. in the U.K.’s next nuclear power plant at the Hinckley complex.