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Balfour Beatty acquires Pennine Group, the UK ground engineering specialists, and agrees to acquire SBB, the German signalling company

Balfour Beatty, the international engineering, construction and services group, announces today that it has acquired Pennine Group, the UK ground engineering business, for approximately £8 million and agreed to acquire SBB, the specialist German signalling contractor, for €14 million.

Commenting on the acquisitions, Ian Tyler, Balfour Beatty Chief Executive, said today:

“Balfour Beatty is, through Stent, already a leader in the piling sector and the acquisition of Pennine gives us a strong, complementary presence in ground engineering. We can now offer the full range of foundation solutions in the UK. The acquisition of SBB will offer us an important opportunity to broaden our signalling capability and to develop further our excellent existing relationship with Deutsche Bahn in Germany.”

Pennine operates throughout the UK and specialises in the treatment and preparation of poor ground by the use of specialist vibration techniques - using proprietary equipment which it also manufactures. It also operates selectively overseas, including in Spain.

SBB is a leader in the German market for electrical signalling installations. It will become a part of Balfour Beatty Rail Power Systems, Balfour Beatty’s Munich-based subsidiary which specialises in rail electrification and power systems for international rail markets.

Pennine

In the UK, growth prospects for ground improvement are attractive, driven by the trend to develop brownfield sites and increasing requirements for environmental remediation. Pennine has a good reputation for delivering cost-effective, value-added, reliable solutions to a wide range of construction customers. There is also significant potential to expand further Pennine’s operations overseas, including in the Middle East where ground conditions favour the technology used by Pennine.

In the financial year ending March 2005, Pennine had sales of £16 million and operating profit of approximately £1.5 million.

The Group employs 130 staff and is based at Bacup in Lancashire.

SBB

SBB currently operates, predominantly, in the former East Germany, but has recently extended its operations to the west. The majority of its work is in the renewal and installation of signalling systems under existing framework contracts with Deutsche Bahn. SBB is a profitable company with a skilled signalling workforce and fits well with our recent acquisition of Bombardier’s UK-based Solid State Interlocking business.

In 2004, SSB had sales of approximately €10 million. The company has 85 employees and is based in Stassfurt near Leipzig.

The acquisition is subject to clearance from the German Cartel Office, which is expected in late August.

Notes to Editors

1. Balfour Beatty is a world-class engineering, construction and services group, well positioned in infrastructure markets which offer significant growth potential. Its partnerships with public and private customers generate secure, sustainable income. Its financial position, with significant net cash and with strong operating cash flows, offers continuing flexibility to add additional capacity and expertise to the business mix and to make appropriate investments in PPP and other long-term growth opportunities.
2. Stent Foundations designs and constructs foundations for all types of building, structures and civil engineering works. Amongst its recent major foundation contracts are:
   • the new Wembley National Stadium
   
   
   • the City of Manchester Stadium
   
   
   • Channel Tunnel Rail Link Contracts 440 and 420
   
   
   • M25 widening at Heathrow Airport
   
   
   • the new Arsenal Stadium at Ashburton Grove
   
   
   • University College London Hospital.
3. In October 2004, Balfour Beatty acquired Bombardier Transportation’s UK Solid State Interlocking (SSI) signalling resources. This acquisition, in conjunction with Balfour Beatty’s existing signalling expertise, created a broad range of signalling related services to service the needs of Network Rail and other customers.
4. Balfour Beatty Rail Power Systems is a major supplier to rail network owners and operators in Germany, Italy, Sweden, Austria, Spain, Portugal, China and Malaysia.