China Civil Engineering Construction Corporation exploring approach for UK contractor, according to report
A Chinese contractor is eyeing a potential £2bn takeover of Balfour Beatty, according to a report in the Sunday Times.
China Civil Engineering Construction Corporation (CCECC) - a subsidiary of China Railway Construction Corporation - has sounded out industry figures and financial advisers about the possibility of bidding for Balfour, according to the report.
Balfour Beatty, which employs 36,000 people, began implementing a turnaround strategy this year under newly-installed chief executive Leo Quinn, following two years of poor financial performance and profit warnings
Reacting to the report, Stephen Rawlinson, analyst at Whitman Howard, said: “It is of course entirely credible that there could be such interest but it will take a bit more than £2bn to wrest full control of the business and its PPP/PFI investments, in our view.”
Cenkos analyst Kevin Cammack commented: “There is no doubt that the Chinese are coming – as evidenced by the civils package award at Swansea Bay and Interserve’s JV win with China State Construction at Nine Elms [One Nine Elms Tower].”
However, Cammack questioned the timing of the bid and the choice of Balfour Beatty - if CCECC is indeed looking to enter the UK market - given half of Balfour’s revenue comes from outside of the UK.
Balfour Beatty declined to comment.
Last week, Swansea Bay Tidal Lagoon announced that another Chinese contractor, China Habour Engineering Company (CHEC), has been awarded a £300m contract to provide marine works on the project - the largest contract awarded on the giant infrastructure development to date.
CCECC is part of China Railway Construction Corporation, the second largest contractor in the world, with revenue of $96.3bn, according to the authoratitive ENR global contractor league table.
CCECC specialises in railways, highways, bridges and housing and also has a strong presence in Africa, including involvement in high profile projects in Nigeria including building four international airports and a high speed coastal railway.