BALFOUR Beatty has agreed an £820m deal to sell the US business at the heart of its recent merger tussle with construction rival Carillion.
The sale of professional services firm Parsons Brinckerhoff to WSP Global comes five years after Balfour bought the business for £380m.
Last month, Balfour’s insistence that the disposal of Parsons went ahead helped to kill off Carillion’s hopes of securing a £3bn merger deal.
Balfour, which counts Yorkshire Water among its major customers, initially held talks with its rival, but walked away due to Carillion’s “wholly unexpected decision” to insist Parsons was included in the merger.
Balfour said it would return up to £200m to shareholders following the deal and a further £85m from the proceeds will be used to reduce the group’s pension fund deficit.
Executive chairman Steve Marshall said the agreement delivered a “significant return” on the original investment and created value for its shareholders.
The group added it is now focused on restoring the fortunes of its UK construction arm, which has been at the heart of recent profits warnings.
Parsons employs 14,000 people worldwide and offers services including strategic consulting, planning and construction management.
WSP said the deal will help it to expand in the UK and give it a stronger presence in key growth regions such as Asia and Australia.
WSP expects the deal to close in the fourth quarter and result in cost savings of about £15m a year over two years.
Balfour is trying to refocus itself as an Anglo-American construction and specialist services group after a difficult 18 months marred by profit warnings and the departure of its chief executive, Andrew McNaughton.
Last month, the company said its turnaround strategy, which is centred on the sale of the US engineering business, was a better prospect for investors than a merger with Carillion.
Carillion’s final offer valued Balfour at £2.1bn in its attempt to create a British construction giant with 80,000 staff around the world.
But Balfour said it was concerned about Carillion’s plans to keep Parsons and reduce its UK construction business.
Balfour said Parsons did not fit with the rest of its US construction and infrastructure support services opera- tions.
Balfour, which was founded in London by George Balfour and Andrew Beatty in 1909, built the aquatics centre at the London 2012 Olympics site and in 2011 completed the painting of the Forth Bridge rail crossing.