Balfour receives £1bn assets offer

Balfour Beatty is the subject of a £1bn bid for some of its prized contracts in a move which could signal the break-up of the beleaguered business.

John Laing Infrastructure Fund confirmed today it has made the offer for Balfour’s portfolio of public private partnership (PPP) contracts, which include long-term agreements to run public projects such as schools and hospitals.

Since joining the stock market in 2010, John Laing said it has proven itself to be a leading infrastructure fund and “an ideal owner” of Balfour’s PPP assets.

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This year Balfour Beatty has issued three profits warnings and its shares have fallen by more than a third, although they jumped today.

Its troubles have been centred around Balfour’s UK construction and engineering services operation due to the impact of design changes, project delays and contractual disputes.

The bid comes after £3bn merger talks between Balfour Beatty and rival Carillion collapsed in August after Balfour’s board refused to ditch plans to sell a US unit as Carillion had wanted.

Following Carillion’s failed bid, Balfour reviewed its PPP portfolio and said it had increased by 46 per cent in value and was now worth £1.1bn.

The portfolio includes 13 road projects, five hospitals, eight schools and 21 US housing military projects.

The remainder of Balfour’s business, outside its PPP work, includes construction projects in the UK and US, and rail maintenance in the UK, Germany and Austria.

Balfour, which has a stock market value of £1.3bn, was founded in London by George Balfour and Andrew Beatty in 1909. It built the aquatics centre at the London 2012 Olympics site and in 2011 completed the painting of the Forth Bridge rail crossing.

The firm has lost a number of senior directors in recent months, including its finance director and chief executive, Andrew McNaughton. He will be replaced by Leo Quinn who will leave his job running defence technology firm Qinetiq, although he is not due to take up his new role until January 1.

Balfour is currently being run by executive chairman Steve Marshall, who led the group through its merger tussle with Carillion and has said he will himself step down once a new chief executive and chairman have been found.