Balfour Beatty to acquire PB in $626m deal

UK construction group Balfour Beatty is set to acquire engineering and consulting companyParsons Brinckerhoff (PB) in a $626 million deal aimed at turning Balfour into an “integrated leader” in the infrastructure services sector.

Balfour revealed this afternoon that it has reached a conditional agreement with the management of the US company, which is currently owned by its employees.

Balfour will fund the acquisition largely through a fully-underwritten £353 million (€396 million; $583 million) rights issue. The issue has been underwritten by JP Morgan Securities, RBS Hoare Govett and Citigroup Global Markets UK Equity, Balfour said in a statement.

The move represents a further step for Balfour into the US market, which currently represents around 24 percent of its revenue. PB has operations worldwide, and is one of the leading civil infrastructure engineering companies in the US, particularly in the transportation sector. It had a revenue of $2.34 billion in the year ended October 2008 and has around 12,500 employees.

Balfour, which declared 2008 total revenues of £8.26 billion last year, derived 27 percent of its revenues from North America, according to its 2008 Annual Review.

Balfour chief executive Ian Tyler said in a statement that, in addition to strengthening its US presence, the acquisition “puts Balfour Beatty in an excellent position to take advantage of increased infrastructure spending. It is a key step in becoming a global integrated leader in infrastructure services”.

The transaction is set to go before a Balfour general meeting on October 7. The completion of the acquisition is scheduled for October 31.