Balfour Beatty divests

02 January 2018

Balfour beatty logo

Having sold a 12.5% stake in the company which operates the UK’s M25 orbital motorway round London, Balfour Beatty has announced the sale of an additional 7.5% stake in Connect Plus.

On 21 December, the UK-based international infrastructure group said that it had reached an agreement with funds managed by Dalmore Capital to sell a 12.5% stake in Connect Plus for a cash consideration of £103 million (€116.06 million). This was said to be more than the directors’ valuation as at 30 June, 2017.

A week later, Balfour Beatty sold an additional 7.5% stake in Connect Plus.

Balfour Beatty said it had an unconditional right to sell the stake to funds managed by Dalmore. Funds managed by Equitix Investment Management were said to have the right to acquire this stake in priority to Dalmore for an identical price during the period to 13 March, 2018.

The sale of the second portion is for a cash consideration of £62 million (€69.88 million), equivalent to the price of the earlier transaction. The expected profit on disposal on this transaction was said to be £32 million (€36.07 million).

As a result of the sale of the 12.5% and this second transaction, Balfour Beatty said that its board’s expectations for both group profit before tax and year end net cash in 2017 were above those included in the Balfour Beatty Trading Update on 12 December, 2017.

It said that taking account of both transactions, the expected 2017 infrastructure investments profit on disposal was now £85 million (€95.81 million). It added that the year-end net cash, which was originally forecast to be in line with the previous year, was still expected to be around £103 million (€116.10) higher, since the proceeds from the sale of the 7.5% tranche would not be received until 2018.

Arrangements with funds managed by Equitix and Dalmore covering the potential disposal of an additional 5% interest in Connect Plus remain in place, said Balfour Beatty. These arrangements lapse on 13 May, 2018, and are subject to a number of conditions. It added that there was, therefore, no certainty that there would be any subsequent transaction.

The group continues to hold a 20% stake in Connect Plus.

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