Balfour Beatty plc, the U.K.-based global construction giant, announced Sept. 17 that it would acquire US engineering stalwart Parsons Brinckerhoff, New York City, for $626 million. The deal, which officials say would keep 13,000-employee PB in tact as a wholly-owned subsidiary, is still subject to approval by shareholders of both firms.
The acquisition, to be financed mainly by Balfour Beatty selling its owns shares to existing investors, is due for completion late next month. PB's 75 shareholders are set to vote on it Oct. 21.
The deal fills business gaps for both firms. It offers PB access to the deeper pockets, construction capability and financial stability of Balfour Beatty, which has revenue of nearly $15 billion, 41,000 employees and is "incredibly healthy," says one observer. The new parent would gain a nearly 125-year-old legend in professional services with a global reach from more than 100 worldwide offices. The firm has revenue of $2.3 billion.
"I'm absolutely clear that we need to maintain the brand, the values, the culture, and the processes of Parsons Brinckerhoff as a complete entity, says Balfour Beatty CEO Ian Tyler, noting the intent to develop "an organization with genuine global reach across the whole spectrum of infrastructure investment, development, and particularly the creation and care of essential assets."
He adds that the acquisition puts Balfour Beatty in an excellent position to take advantage of increased (U.S.) infrastructure spending, and is a key step in becoming a global integrated leader in infrastructure services."
For PB, the deal would culminate a long search for a strategic partner, affected over the last two years by financial market woes and by culture incompatibility. Company CEO Keith J. Hawksworth says the Balfour Beatty deal "creates an organization with world-class capabilities." PB Chairman James L. Lammie says PB will retain its name and organizational structure as a wholly-owned Balfour Beatty company."
The transaction is the latest and largest of Balfour Beatty's purchases of US-based companies. It purchased the nonresidential construction unit of Centex Group in 2007 and previously acquired Heery Construction.
Balfour Beatty, which is publicly traded on the London exchange, announced last month that profits for the first six months of 2009 rose 30% and that earnings per share went up 6%. It had announced earlier this year more than
$1.2 billion in major contracts in the US, which now makes up 30% of its revenue. "The first half of 2009 was a further period of growth for the group," Tyler said.