By Jeffrey McCracken
London-based construction firm Balfour Beatty /zigman2/quotes/202863772/delayed UK:BBY -0.38% PLC will acquire New York's Parsons Brinckerhoff Inc. for $626 million, bringing into the fold a firm that has been at the center of large U.S. construction projects, including the World Trade Center and Boston's Big Dig.
The all-cash deal still needs to be voted on by shareholders at both companies. Balfour is expected to tap the capital markets to raise money to finance the deal.
It will bring together two firms that were founded about a century ago and have built airports, hospitals, bridges and other major projects all over the world. The market for such projects remains challenged, as governments and large companies put big projects on hold.
The hope is to bring together a company that does the bulk of its work in Europe with a smaller firm that does most of its business in the U.S. The deal also has some national-security implications, as Parsons has done work for the Department of Homeland Security and both companies work on mass-transit networks, military contracts, power plants and other sensitive projects.
Privately held Parsons is an employee-owned construction, design and engineering firm. Its notable projects included New York's first subway system. In the 1960s it designed the National North American Air Defense Command Center, a hardened facility under Cheyenne Mountain in Colorado. More recently it designed the Beijing Olympic convention center.
Parsons has also been part of the Big Dig project to overhaul Boston's highway transportation system -- a 20-year-old effort that has become one of the country's most expensive projects.
For 2008, Parsons reported revenue of $2.3 billion and net income of $74 million. It has about 13,000 employees, according to the company's Web site.
Its acquirer is an even bigger player in the industry. For the first half of the year, publicly traded Balfour Beatty reported revenue of £5.1 billion ($8.4 billion) and operating profit of £114 million, up from £4.3 billion and £87 million, respectively, a year earlier. For all of 2008, it reported revenue of £9.5 billion with operating profit of £251 million pounds.
With more than 41,000 employees, Balfour Beatty works on rail, road, hospital and home construction projects around the world, but the majority of its business is in Europe, such as building the London Olympic aquatic center.
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