News Releases
Balfour Beatty acquires 50% interest in Gammon in Hong Kong for HK$475 million (£33 million)
09 Aug 2004Further to its announcement of 27 May 2004, Balfour Beatty, the international engineering, construction and services group, announces today that, following a period of due diligence, it has completed the acquisition of Skanska’s 50% interest in Gammon, the leading Hong Kong-based construction company. Jardine Matheson owns the other 50% of the company. The consideration paid for Skanska’s interest was HK$475 million (£33 million) in cash.
Gammon is a strong, broadly-based construction group, which is the market leader in Hong Kong. It also has established businesses in China and Singapore. Gammon’s main business is in civil engineering, foundation engineering and major building construction. It also owns a number of smaller businesses which support its main contracting activities.
Commenting on the acquisition, Balfour Beatty Chief Executive, Mike Welton, said: “The Group’s strategy is to expand, within its core competences, in geographical markets with good long-term prospects. Gammon is already a leader in its principal market and, with a strong partner in Jardine Matheson who has significant regional presence, we see excellent growth potential for our core businesses in civil and power engineering, rail engineering and building and construction services.”
Gammon’s average operating profit margin over the last five years has been approximately 2.5%. In 2003, Gammon had sales of HK$5.7 billion (£404 million) and profits before tax of HK$100 million (£7 million). 2003 results were impacted by one-off issues and more challenging market conditions in Hong Kong than in recent years. These factors have been reflected in the consideration paid.
Gammon has a current net cash balance of approximately HK$471 million (£33 million) and an order book of over HK$7.5 billion. On 31 December 2003, it had net assets of HK$758 million (£53 million).
As part of the transaction, Balfour Beatty’s existing HK$1 billion per annum Hong Kong business will be merged with Gammon, enhancing Gammon’s civil engineering capacity and adding a powerful electrical and mechanical capability to Gammon’s existing substantial footprint.
Enquiries to:
Tim Sharp
Tel: 020 7216 6884
