Balfour announced on Wednesday that it had sold Andover Controls, its US building management and security systems specialist to French power group Schneider for £227m.
The move strengthens the firm's cash position and raises the likelihood of a substantial acquisition this year. A City analyst said: "This is a very, very good price. My hunch is that Balfour is going to buy a US business with this money. It has spent a long time looking over there."
A spokesperson for Balfour said that it would look in the USA, but no deal was imminent. The spokesperson added: "This sale will help improve our business mix.
We can look at acquisitions and investments in PFI, as well as improving the structure of our business."
Balfour tried to buy US contractor JA Jones in September 2002, but the spokesperson said that it would now be in a stronger position to make an acquisition. It is believed that Balfour can afford to make a cash purchase, rather than relying on a share issue. Any purchase seems likely to be led and negotiated by Ian Tyler, Balfour's chief operating officer.
The sale of Andover allows Balfour to focus on its core construction businesses. Balfour chief executive Mike Welton (pictured) said: "Andover, operating as a separate entity in the building controls market, would have become increasingly vulnerable to its major competitors. It is clear that Andover's highest future value to Balfour is realised through disposal."
Industry insiders are also speculating that John Moore, presently managing director of Crown House Engineering, is in talks to join Kilpatrick, Balfour's M&E arm. Crown House is in the process of being sold by Carillion to Laing O'Rourke.
This is a very, very good price. My hunch is that Balfour is going to buy a US business
City analyst on Balfour sale
Meanwhile, Hertfordshire contractor Fitzpatrick was sold to top-five Dutch company VolkerWessels, ending 83 years of family control. Chairman Patrick Fitzpatrick – who is the son and grandson of the company's two founders – and his own daughter, director Penny, are believed to have made £50m from the deal.
Patrick will be replaced as chairman by VolkerWessels management board member Andries de Jong. No other management changes are planned and there will be no redundancies.
Fitzpatrick's 750-strong staff and £225m turnover will join an international group that made a net profit of £42m last year.
De Jong said: "The takeover ties in with VolkerWessels' strategy to expand in the UK, with companies delivering synergy benefits with companies we already have there. We have come to recognise Fitzpatrick as a robust business, with strong management."
Patrick Fitzpatrick added: "The acquisition by VolkerWessels ensures that Fitzpatrick will become part of a large international company, enabling it to further develop and expand the growth strategy that has already been implemented."
Part of this strategy was to refocus its building division, which had a poor year in 2002, and has subsequently made the group an acquisition target. In his chairman's statement for that year, Patrick said: "Building outgrew its ability to deliver and certain contracts showed a distinct lacklustre image."
n Former Redrow boss Steve Morgan hit out at the board of Liverpool Football Club this week, after his proposed £73m investment package appeared to be rebuffed.
Fitzpatrick: The company that built Parliament SquareThe company was the creation of Patrick Fitzpatrick’s grandfather, who left Cork in the late 19th century and became a street mason in England. His son John followed him into this trade, and together they built the foundations of what has become one of the largest privately owned construction companies in the UK.
Fitzpatrick did much of its early work in London, holding the paving contracts for the City of London and the City of Westminster for many years. It remodelled the surrounds of Marble Arch twice, reconstructed Parliament Square, worked on and around Tower Bridge, and repaved the forecourt of Buckingham Palace. The contractor also created one of the earliest stretches of the M1 back in the late 1950s and has since completed 1300 road, and 126 airfield projects. Fitzpatrick, which is based in Hoddesdon, Hertfordshire, employs about 1000 staff, and had sales of about £230m in 2003.
VolkerWessels, the company that has bought it, is made up of more than 150 construction firms that focus on the Dutch market but also operate in Belgium, Germany, the UK, Canada and the USA. It has 15,700 employees, and an operating revenue of £1.1bn in its interim results published in September.