Balfour Beatty Pic's Professional Services Division To be Acquired By Canada's WSP Global
Betting On Growth: Balfour Beatty Pic's Professional Services Division To be Acquired By Canada's WSP Global
A UK building group Balfour Beatty will be selling its US professional services division to Canada's WSP Global Inc. The British company has also announced that it would return up to 200 million pounds or $329 million to shareholders and cut down the pension fund deficit following the sale.
Balfour Beatty will be selling its US based Parsons Brinckerhoff business for about $1.24 billion. The US professional services division will be sold to the Canadian firm WSP Global Inc. lock, stock and barrel. The deal is expected to be completed in the fourth quarter of 2014 and it was official announced by the 2 companies just recently.
Balfour has also indicated that apart from the investor payment, around 85 million pounds of the monetary proceeds will be used solely for tackling the pension fund deficit of the group. The Canadian company is buying the US professional services division for around 692 million pounds so that it can increase its footprint in this niche segment.
The deal will also be extremely valuable in assisting WSP to expand to the United Kingdom as well. The deal will enable the Canadian company to expand its footprint to high-growth regions such as Asia as well as Australia. Here's how the deal is being financed, according to a report by Reuters. Around $502 million bought deal public offering with around $400 million in private placement and new credit facilities. This is as per the statement released by WSP to the Reuters news media agency.
As far as the financing is concerned, the Reuters report has explained how the bought deal involves a commitment by underwriters to purchase the entire offering from the client and then re-sell it. WSP Global has come into an agreement with CIBC and Raymond James to finance the deal, according to the report.
WSP has been quoted as saying that the deal includes an additional consideration for cash which has been retained by the US professional services division that is part of the deal, and it adds up to $110 million. The deal will result in massive cost savings of over $25 million over 2 years for WSP Global Inc.
For this deal, the financial advisers are CIBC and Barclays while Stikeman Elliot LLP is the legal adviser. Apart from this, Hogan Lovells LLP is also providing legal advice to WSP with regards to US laws. WSP shares have responded positively to details of the deal.
Parsons Brinckerhoff's claim to fame is that it designed the first subway line in NY for around $1.24 billion in cash. The Canadian firm WSP Global will now expand to US and Australia with this deal. The Montral based company has really notched up a huge score with this deal. Parsons had been purchased by Balfour Beatty in 2009. Balfour Beatty is currently the largest builder in the UK.
