Media

News Releases

Balfour Beatty to acquire Parsons Brinckerhoff Inc.

THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN INTO OR FROM THE UNITED STATES, AUSTRALIA, JAPAN OR SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

BALFOUR BEATTY TO ACQUIRE PARSONS BRINCKERHOFF INC., ONE OF THE WORLD'S LEADING PROFESSIONAL SERVICES COMPANIES,
FOR US$626 MILLION

3 for 7 Rights Issue at 180 pence per ordinary share
to raise approximately £353 million net of Rights Issue expenses

SUMMARY

• Acquisition of Parsons Brinckerhoff for US$626 million (c.£380 million), subject to the satisfaction of certain conditions
• Fully-underwritten 3 for 7 Rights Issue to raise approximately £353 million (net of Rights Issue expenses) to substantially finance the Acquisition
• Parsons Brinckerhoff is an employee-owned, US-based international professional services firm focused on infrastructure:
• worldwide revenue of US$2.34 billion in the year ended 31 October 2008
• a network of over 100 offices and over 12,500 employees
• The Board believes the Acquisition will accomplish a number of Balfour Beatty's objectives by:
• establishing a global professional services business of scale, with over 14,000 employees;
• creating a leading position in US civil infrastructure, particularly in the transportation sector;
• enhancing its global reach, as well as strengthening its position in existing geographical markets and the power sector.
• The Acquisition and Rights Issue, taken together and before exceptional items, are expected to enhance earnings per share in the year ending 31 December 2011 *

Commenting on the acquisition today, Balfour Beatty Chief Executive, Ian Tyler, said:
"The acquisition of Parsons Brinckerhoff represents the realisation of a number of key strategic objectives for Balfour Beatty. In particular, we believe it makes us one of the world's major players in professional services, substantially strengthens our US presence and puts Balfour Beatty in an excellent position to take advantage of increased infrastructure spending. It is a key step in becoming a global integrated leader in infrastructure services."

Keith Hawksworth, Chief Executive Officer of Parsons Brinckerhoff, said
"We are delighted to be joining the Balfour Beatty Group. We believe there is a clear fit between our two closely-aligned companies. We are very enthusiastic about what we see as the enormous potential that can be realised by working together in the future."

Parsons Brinckerhoff
Parsons Brinckerhoff is one of the world's leading professional services firms, ranked eleventh in terms of global design revenues amongst US-based companies by ENR in 2009. It has a strong focus on civil infrastructure, particularly transportation in the US, and substantial businesses in the power market in the UK. It also operates selectively in the building market in South and East Asia, where it specialises in electrical and mechanical design, as well as in the water market in both the US and Australia. Parsons Brinckerhoff is well known for its programme management of large, complex projects and has been involved in some of the largest and most important infrastructure projects in the world.

Parsons Brinckerhoff operates through a network of over 100 offices, has approximately 12,650 employees, and is entirely employee-owned, with approximately 4,750 stockholders. In the year ended 31 October 2008, its worldwide revenue was US$2.34 billion with adjusted profit from operations before exceptional and employee stock items of US$107 million.

Rationale for the Acquisition
The Board believes that the combination of Balfour Beatty and Parsons Brinckerhoff would represent the successful realisation of a number of key strategic objectives, in particular, the development of a global professional services business and the further strengthening of Balfour Beatty's US presence. The Board believes that the Enlarged Group will have enhanced long-term growth potential through its leading position in the international markets for infrastructure services and from increased infrastructure spending in both developed and emerging markets. Adding Parsons Brinckerhoff's successful and well-established international professional services business to Balfour Beatty's very significant construction, existing professional services and investment businesses will create a group with significantly enhanced capabilities to address the needs of key infrastructure customers internationally.

The Enlarged Group will have a presence across the entire life cycle of major infrastructure assets - from conception and funding to construction, operation and maintenance. This will enable the Enlarged Group to provide customers with a comprehensive range of services relevant to all stages of infrastructure asset development and to operate in a wider range of geographies. Additionally, the Board believes that the trend of major infrastructure owners increasingly looking for an integrated service approach from their key partners and suppliers will continue in the future, providing increasingly favourable market dynamics for the Enlarged Group.

The Rights Issue
The acquisition consideration of US$626 million is to be substantially financed through a fully underwritten Rights Issue of 205.5 million New Shares, which will raise, net of Rights Issue expenses, approximately £353 million. The Enlarged Group's policy will continue to be to maintain its established capital structure principles, reflecting surety bonding requirements and maintaining customer confidence.

Pursuant to the Rights Issue, Qualifying Shareholders will be offered 3 New Shares for every 7 Existing Shares held at close of business on the Record Date at a price of 180 pence per New Share.

This Issue Price represents a 46.8 per cent discount to the closing middle market price of 344 pence per Ordinary Share on 16 September 2009, the latest practicable date before the announcement of the Rights Issue, after adjustment for the 2009 Interim Dividend of 5.5 pence. The Issue Price also represents a discount of 38.1 per cent to the theoretical ex-rights price on the same basis.

J.P. Morgan Cazenove Limited and RBS Hoare Govett Limited are acting as Joint Bookrunners and Citigroup Global Markets U.K. Equity Limited is acting as Senior Co-Lead Manager in relation to the Rights Issue. The Rights Issue has been fully underwritten by J.P. Morgan Securities Ltd., RBS Hoare Govett Limited and Citigroup Global Markets U.K. Equity Limited.

The New Shares, when issued and fully paid, will rank pari passu in all respects with the Existing Shares including the right to receive dividends or distributions made, paid or declared after the date of the Prospectus other than in respect of the 2009 Interim Dividend.

Conditionality
Completion of the Acquisition is conditional on, amongst other things, (i) Shareholder approval and (ii) completion of the Rights Issue. The Acquisition is also conditional on the approval of the holders of not less than 75 per cent. in aggregate of Parsons Brinckerhoff's total capital stock, which will be sought at a general meeting of Parsons Brinckerhoff Stockholders which is scheduled for 21 October 2009.

Shareholder approval for the Acquisition and for the Resolutions required for the Rights Issue will be sought at a General Meeting to be held on 7 October 2009. The Rights Issue is not conditional on completion of the Acquisition. Subsequent to the Rights Issue becoming wholly unconditional, the Acquisition could fail to complete. The Prospectus in connection with the Rights Issue and the Acquisition including the notice convening the General Meeting is expected to be published and posted to Shareholders shortly.

Expected Timetable of Principal Events

• Posting of Parsons Brinckerhoff proxy statement1 on 24 September 2009.
• Record Date for entitlement under the Rights Issue close of business on 2 October 2009.
• Latest time and date for receipt of Balfour Beatty General Meeting Forms of Proxy 10.00 a.m. on 5 October 2009.
• Balfour Beatty General Meeting 10.00 a.m. on 7 October 2009.
• Despatch of Provisional Allotment Letters (to Qualifying Non-CREST Shareholders only)2 on 7 October 2009.
• Dealings in New Shares, nil paid, commence on the London Stock Exchange 8.00 a.m. on 8 October 2009.
• Existing Shares marked "ex rights" by the London Stock Exchange 8.00 a.m. on 8 October 2009.
• Nil Paid Rights credited to stock accounts in CREST
  (Qualifying CREST Shareholders only)2 8.00 a.m. on 8 October 2009.
• Nil Paid Rights and Fully Paid Rights enabled in CREST by 8.00 a.m. on 8 October 2009.
• General meeting of Parsons Brinckerhoff1 on 21 October 2009 (New York).
• Latest time and date for acceptance, payment in full and registration of renunciation of Provisional Allotment Letters 11.00 a.m. on 22 October 2009.
• Dealings in New Shares, fully paid, commence on the London Stock Exchange by 8.00 a.m. on 23 October 2009.
• New Shares credited to CREST stock accounts 8.00 a.m. on 23 October 2009.
• Completion of the Acquisition is expected by 31 October 2009.
• Despatch of definitive share certificates for the New Shares in certificated form by no later than 2 November 2009.

J.P. Morgan Cazenove Limited, Citigroup Global Markets Limited and RBS Hoare Govett Limited are acting as Joint Sponsors and Citigroup Global Markets Limited is Sole Financial Adviser to Balfour Beatty. J.P. Morgan Securities Ltd., RBS Hoare Govett Limited and Citigroup Global Markets U.K. Equity Limited are joint underwriters of the Rights Issue.

Houlihan Lokey is financial adviser to Parsons Brinckerhoff.

This summary should be read in conjunction with the detailed press announcement which follows.

ENDS

A presentation to analysts and investors will be held today at J.P. Morgan Cazenove, 20 Moorgate, London EC2R 6DA at 2.15pm for 2.30pm start.

There will be a live webcast of this presentation on www.balfourbeatty.com and the slides presented will be available today on the website.

Enquiries: