Balfour Beatty's £36m acquisition of Gammon Skanska raises turnover in Hong Kong to £500m
Contractor Balfour Beatty will become a £500m-turnover business in Hong Kong when it completes the £36m acquisition of Skanska's 50% stake in contractor Gammon Skanska.

Balfour will merge its Hong Kong business into Gammon, which is largely focused on civil engineering, when the deal has been signed.

This is likely to take place after due diligence at the end of this month.

It also hopes that its beefed-up presence in the country will help Balfour's rail engineering and power transmission businesses to pick up contracts in Hong Kong.

Swedish contractor Skanska sold off its interest in Gammon as it looks to retrench into the UK, US and European markets. This is despite the cash strength of Gammon, which is believed to be about £35m.

We will keep adding the odd business to the mix

Balfour Beatty spokesperson

As a 50% stakeholder in Gammon – the rest is owned by Hong Kong conglomerate Jardine Matheson – Balfour effectively owns half of this cash reserve. Taking into account this cash reserve the acquisition will be potentially less than £20m.

Mike Welton, chief executive at Balfour Beatty, said: "Balfour already has a civil engineering and electrical business in Hong Kong with sales of £70m and understands the market well. The group's strategy is to expand within its core competences in geographical markets with good long-term prospects."

Anthony Nightingale, director at Jardine Matheson, added: "Balfour Beatty brings very considerable expertise and shares our vision of developing Gammon as a major regional contractor."

The projects that Balfour Beatty's Hong Kong subsidiary is currently working on in the region will be completed under the existing brand. Any new work will take place under the Gammon banner.

Balfour Beatty's work in the region includes the £106m Lok Ma Chau Rail Terminus on the China/Hong Kong border and the £38m East Hall at Hong Kong Airport.

Balfour's purchase is expected to be the start of an acquisition trail. Two weeks ago it announced the sale of US building management and security systems specialist Andover Controls to French power group Schneider Electric for £227m.