Balfour Beatty Plc, which rebuffed a merger offer from Carillion Plc, boosted the valuation of its public-private partnership projects by 46 percent to 1.05 billion pounds ($1.7 billion), bolstering its case for staying independent.
The higher valuation at the end of June reflects changes including reduced discount rates, improved cash-flow predictions and an altered economic outlook, Britain’s largest builder said in a statement today. The evaluation of the public-private partnerships, projects jointly funded by governments and private companies, began before the merger talks became public.
“The revaluation ensures that investors have a clear understanding of the real value of assets held within our PPP portfolio,” Ian Rylatt, the head of London-based Balfour Beatty’s infrastructure investments division, said in the statement. “We also believe the valuation is still based upon somewhat conservative assumptions.”
Balfour Beatty, whose chief executive officer quit in May after predicting a profit drop, turned down Carillion’s advances, which would have formed a company with a market valuation of more than 3 billion pounds. The Wolverhampton, England-based builder abandoned its bid on Aug. 20 after Balfour Beatty rejected its latest increased offer.
Balfour Beatty fell 0.7 percent to 245.3 pence at 9:14 a.m. in London, taking the decline to 15 percent this year and giving the company a market value of about 1.7 billion pounds.
A sticking point for Balfour Beatty in talks with Carillion was the Parsons Brinckerhoff engineering-consulting unit that it’s trying to divest. Carillion wanted to keep that business.
Balfour Beatty has an order pipeline in the U.K. and North America of more than 4.5 billion pounds, it said in today’s statement. The company said it will invest about 250 million pounds in its PPP portfolio over the next five years.