Balfour Beatty plc, the U.K.-based global construction giant, announced on Sept. 17 it would acquire U.S. engineering stalwart Parsons Brinckerhoff, New York City, for $626 million. The deal, which officials say would keep 13,000-employee PB intact 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 own shares to existing investors, is due for completion late next month. About 5,000 PB shareholders will vote on 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 an annual 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. Parsons Brinckerhoff 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 U.S.-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, last month announced 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 U.S., which now makes up 30% of its revenue. "The first half of 2009 was a further period of growth for the group," Tyler said.