Balfour Beatty rejects JLIF’s £1-bn bid for its public-private partnership assets
05 Dec 2014
The UK's largest construction firm, Balfour Beatty, today rejected a £1-billion ($1.6 billion) bid from John Laing Infrastructure Fund for its public-private partnership assets.
''The board has concluded that the proposal falls significantly short of its own view of the value of the portfolio, and accordingly the proposal from JLIF has been rejected,'' Balfour Beatty said in a statement.
Early this week, London-listed John Laing Infrastructure Fund (JLIF) offered to pay £1 billion to buy the public-private partnership assets of crisis-hit construction company Balfour Beatty. (See: John Laing offers to pay £1 bn for Balfour Beatty's public-private partnership assets)
In August, Balfour Beatty said that it had valued the portfolio at £1.05 billion as of June, but it today said that the realisable value of the PPP portfolio is substantially in excess of its current valuation.
Balfour Beatty has been struggling due to lack of demand as well as problems in completing projects on time due to spiraling costs.
Although it has a turnover of £8.5 billion, the company's stock price has fallen by more than a third this year. Its current market cap is around £1.26 billion.
Balfour Beatty had in September sold its US-based engineering and construction consulting arm Parsons Brinckerhoff to Canadian company WSP Global for £820 million. (See: Balfour Beatty sells Parsons Brinckerhoff for £820 mn)
Parsons Brinckerhoff was in part responsible for the collapse of the US construction services giant Carillion's £3-billion merger with its British rival.
Earlier this year, Carillion made three bids, the last amounting £2.1 billion, to acquire Balfour, before abandoning it in August.
Parsons had emerged as a battleground for the two companies as Carillion said it needed Balfour to keep Parsons and its stable cash flow - one third of Balfour's earnings came from the business - to cover the merger restructuring costs.
JLIF is one of Europe's largest listed infrastructure funds, and invests mainly in hospitals, schools and road projects in the UK, Europe and North America.
