NEW YORK — International engineering and construction services group Balfour Beatty announced a $626 million deal to buy New York-based professional services firm Parsons Brinckerhoff.
The acquisition is designed to give the Balfour group a leading position in the infrastructure sector in the United States at a time when the American Recovery and Reinvestment Act is injecting billions of dollars into the non-residential construction market for projects across a range of segments, including public safety.
The group’s U.S. division, Balfour Beatty Construction U.S., which operates across the commercial, industrial and institutional sectors, has completed more than 6 million square feet of facilities in the corrections market. The group established its American division through the 2007 acquisition and renaming of the 70-year-old, Dallas-based construction services company Centex Construction.
The division’s criminal justice projects have an estimated value of approximately $1.8 billion, according to the company. Projects include the recently completed $49 million, 432-bed addition to the Rappahannock Regional Jail in Stafford, Va., the 200,000-square-foot replacement U.S. Courthouse in Brownsville, Texas, the McRae Correctional Facility in Georgia, and the Jack Evans Dallas Police Department headquarters.
More recently, Balfour was awarded the pre-construction and construction management services contract, in s joint-venture Rodgers Builders Inc., of Charlotte, N.C., for the approximately $290 million, 1,700-bed jail expansion in Mecklenburg, N.C.
As reported in Correctional News (see the July/Aug. issue), fiscal difficulties related to the economic downturn forced county officials to postpone the project until mid-2010.
The addition of Parsons’ established professional services business will also expand the scope and scale of Balfour’s global operations and strengthen its position in existing geographical markets.
Balfour Beatty will raise approximately $580 million through a fully underwritten, three-for-seven rights issue to finance the acquisition of Parsons. Once complete, the deal will make Balfour Beatty the first U.K.-based construction firm with revenues of more than $16 billion.
“The acquisition of Parsons Brinckerhoff represents the realization of a number of key strategic objectives for Balfour Beatty,” says Ian Tyler, CEO of Balfour Beatty. “In particular, we believe it makes us one of the world’s major players in professional services, substantially strengthens our U.S. presence and puts Balfour Beatty in an excellent position to take advantage of increased infrastructure spending.”
Balfour Beatty, which is headquartered in the United Kingdom, has expanded its international operations significantly during recent years, generating about 30 percent of global revenues from its U.S. operations prior to the Parsons’ deal. The group reported revenues of approximately $15 billion in 2008.
The acquisition allows the company to have a presence across the entire life cycle of major infrastructure assets — from conception and funding to construction, operation and maintenance, officials say.
Established in 1885, Parsons Brinckerhoff is an employee-owned, international professional services firm with 12,600 staff and more than 100 offices around the world. It was ranked among the top 12 U.S. companies in design revenues in 2009.
Predominantly active in infrastructure projects in the U.S., U.K., Australia, and Asia, Parsons has been involved in some of the largest, most complex infrastructure projects in the world, including NORAD’s secure underground facility in Colorado.
The company reported a turnover of $2.3 billion for its global operations for fiscal year 2008 with an adjusted profit $107 million.