As part of its quarterly management statement, British contractor Balfour Beatty announced that is considering the sale of Parsons Brinckerhoff, the engineering and design firm it purchased for $642 million in September 2009.
The report came on the heels of the revelation that profits for 2014 are expected to be down $50 million in its U.K. construction business. CEO Andrew McNaughton has also stepped down, with executive chairman Steve Marshall taking over on an interim business. Following the announcements, Balfour Beatty’s shares dropped 16 percent.
As part of the change in strategy, the company announced that it is exploring ways to simply its structure and create a more focused group. Included in those discussions is the evaluation of options for a possible sale of Parsons Brinckerhoff. Balfour Beatty stated that a sale would only be pursued if it provides attractive shareholder value.
According to the statement released by Balfour Beatty: “Since its acquisition by Balfour Beatty in 2009, Parsons Brinckerhoff has continued to be a highly successful business and has grown significantly under Balfour Beatty’s ownership. As anticipated at the time of the acquisition, there has been growth in the market towards design and build and Public Private Partnership contracts. However, having professional services and construction capabilities combined within one organisation has not delivered material competitive advantage for the Group. Therefore, we are examining how best to realise the substantial value of the Parsons Brinckerhoff business.”
According to Marshall: “Today’s trading update is once again disappointing. The Board is committed to rapidly addressing the root causes. As a result, action is being taken to improve operational delivery in the U.K. construction business. Our recent strategic review meanwhile has concluded that a sale of Parsons Brinckerhoff could deliver attractive shareholder value and make Balfour Beatty a simpler and more focused Group going forward.”
Parsons Brinckerhoff was founded in 1885 and has more than 14,000 employees worldwide. The firm has been involved on thousands of infrastructure projects across the globe, including tunnels, power, buildings, water/wastewater, mining and community development.