Ballast Nedam was expected to make the announcement yesterday (Thursday) to coincide with its interim results.
As Building went to press, a price for the business was uncertain, although there had been hints in the market that the Dutch parent would have to pay any buyer to take a business that lost £32m in the first half of 2002. But sources close to the deal have confirmed that the Dutch parent did not pay the management, and received more than a token fee for the business.
Sales literature for the subsidiary was distributed by Ballast Nedam in July. The management team was up against four companies for the business, including Bilfinger Berger and Montpellier.
But the sales literature was thought to have put off at least two of these companies, as it explained the full extent of Ballast's financial woes. The interim results were expected to show that the pension deficit alone was about £30m.
One contractor said that the management team should take responsibility for the business' financial problems. The source said: "Good luck to them [the executive team], they deserve it. If management create a problem, they should fix it. Normally you'd have to pay someone to take that kind of business off their hands. The pension deficit is huge."
There were also suggestions that the executive team would cherry-pick the best contracts and demand that loss-making contracts remained with the Dutch parent. But this seems unlikely given Ballast Nedam's desperation to sell the UK arm as a whole.
The move comes despite a spokesperson for the Dutch parent saying earlier this year that a management buyout was not its preferred option. The spokesperson said: "What we are concerned with is to ensure that the new parent is a good strategic fit."
It appears likely that existing managing director Phillip Cooper will continue to head the business. Cooper declined to comment.
The road to the sale
- July 2001 Ballast is slammed by its Dutch parent for half-year losses of £1.8m.
- December 2001 UK arm chief executive and chairman Bob Heathfield departs after losses of Ballast Nedam’s international businesses total £40m.
- July 2002 Ballast loses £32m for the first half of the year. The business is put up for sale. Potential bidders are tipped, including Montpellier arm YJL, Hochtief and HBG.
- February 2003 Ballast Nedam puts in place independent funding arrangements for UK arm, so that it can be run as a separate entity.
- May 2003 Building reveals that there are at least five bidders for the company, including a management buyout team.
- June 2003 Sales literature is distributed to bidders.