Balfour Beatty, the international infrastructure group, announces today that Balfour Beatty Construction US (“BBC”) has reached agreement to acquire Howard S. Wright (“HSW”) for an estimated net cash consideration of US$93 million (£58 million) for a zero net assets balance sheet. US$70 million (£44 million) is payable at closing with a further amount to be paid on an earn-out basis over 4.5 years, conditional on the satisfaction of certain financial projections. The earn-out is estimated to be US$23 million and is capped at US$40 million.
HSW provides preconstruction, general contracting and construction management services across a wide range of sectors including corporate office, healthcare, education, data centres and multi-family housing.
Entry into the buildings construction market in Northern California and the Pacific Northwest is in line with BBC’s national expansion strategy and follows its acquisition of SpawMaxwell in Houston and its recent growth in Southern California through Barnhart Balfour Beatty. HSW represents a perfect geographic fit for BBC with its strong presence in Portland, Seattle, San Francisco and Phoenix - growth markets emerging from the economic downturn. The combined business of BBC and HSW represents the third largest construction services provider in the US general building market based on 2010 figures published by Engineering News-Record (ENR).
HSW generated revenues of US$401 million (£257 million) and pre-tax profits of US$22.7 million (£14.6 million) in the year ended 30 September 2010 and had gross assets of US$162 million as at 30 September 2010. In the five reporting periods to 30 September 2010, HSW’s average annual revenue was approximately US$680 million and its average profit margin was just over 2.5%. HSW’s order book at 31 May 2011 was US$675 million.
HSW has similar corporate values to those of BBC and represents an excellent cultural fit. The company will retain its senior leadership team within BBC, and trade under the name “Howard S. Wright – a Balfour Beatty Company”.
Balfour Beatty Chief Executive, Ian Tyler, commented:
“Howard S. Wright is a well-regarded company with a strong reputation for quality as evidenced by its blue-chip customers, and is a leader in sustainable building. HSW is an excellent geographic and strategic fit with our existing US capabilities, and the acquisition extends Balfour Beatty’s skill base and reach in Northern California and the US Pacific Northwest, a significant growth market that is emerging from the downturn.”
Balfour Beatty plc
Tel 020 7216 6924
Balfour Beatty plc
Tel 020 7216 6865
Notes to editors:
Exchange rates used to convert the figures in this press release are below.
GBP/US$ rate on 29 June 2010: 1.60
GBP/US$ average rate for the year ended 30 September 2010: 1.56
Balfour Beatty (www.balfourbeatty.com) is a world-class infrastructure group with capabilities in professional services, construction services, support services and infrastructure investments.
We work in partnership with our customers principally in the UK, continental Europe, the US, South-East Asia, Australia and the Middle East, who value the highest levels of quality, safety and technical expertise.
Key infrastructure markets include transportation (roads, rail and airports); social infrastructure (education, specialist healthcare, and various types of accommodation); utilities (water, gas and power transmission and generation) and commercial (offices, leisure and retail).
The Group delivers services essential to the development, creation and care of these infrastructure assets including project design, financing and management, engineering and construction, and facilities management services.
Balfour Beatty employs 50,000 people around the world.
With over 125 years in business, Howard S. Wright provides preconstruction, general contracting and construction management services for clients in the public and private sector. The company serves 18 market sectors including healthcare, technology, education and retail. It operates out of its offices in Seattle, Portland, San Francisco and Phoenix. Its extensive client list includes blue-chip companies including Nike, Intel, Microsoft and Kaiser.
In 2011, the company ranked within the Top 50 Domestic Building Contractors by Engineering News-Record. Notable projects for the company include City Center Plaza, the Department of Information Services for the State of Washington and St. John Medical Center.
Howard S. Wright is a leader in sustainable building with over $1.5 billion in Leadership in Energy and Environmental Design (LEED) projects completed to date. Their extensive work for clients in the public and private sector has resulted in the successful delivery of construction management and general contracting services for ten of the Fortune 100 companies.