Balfour Beatty Plc’ share price up, fends off a $1.6-billion John Laing acquisition offer for its state projects

Balfour Beatty Plc revealed that it rejected a takeover bid from John Laing Infrastructure Fund Ltd for its government-supported projects. The offer was estimated to £1 billion ($1.6 billion). In August the company turned down a takeover offer, which was made by Carillion Plc.

The company announced in an official statement, cited by Bloomberg: “The board has concluded that the proposal falls significantly short of its own view of the value of the portfolio.”

Balfour Beattys investment arm was approached by John Laing. About 60 private finance initiative contracts and accounts, which amount to about two-thirds of the total value of the company, are currently included in the investment portfolio of the builder. According to Balfour Beatty, its portfolio was estimated to £1.05 billion in June this year, but it has “substantially” increased since then.

As reported by the Financial Times, the company also added: “This has been recently evidenced by the disposal of an investment at a 28 per cent premium to the half-year directors’ valuation.”

The U.K.-based company has been faced with difficulties related to mismanaged projects. In addition, the builder has been affected by the considerably lower demand at the market since the global crisis.

The recently rejected offer comes after a couple of difficult years for Balfour Beatty, during which a series of profit warnings have been issued by the company. In addition, the builder rejected several acquisition offers made by Carillion.

Analysts at Liberum commented on the rejected offer for the Financial Times: “We are not surprised that Balfours have rejected this first offer on the basis that the valuation is conservative (a recent disposal was at a 28 per cent premium) and the valuation should grow.”

Balfour Beatty Plc added 5.90% to close at GBX 195.60 per share on Friday. The company is valued at GBP 1.270 billion. According to the Financial Times, the 11 analysts offering 12-month price targets for Balfour Beatty Plc have a median target of GBX 200.00, with a high estimate of GBX 250.00 and a low estimate of GBX 115.00. The median estimate represents a +8.28% increase from the last price of GBX 184.70.