Balfour buys Skanska's stake in Gammon

Balfour Beatty has agreed to buy Skanska's 50% stake in Gammon, the Hong Kong-based construction company, for £36m.

Gammon's main business is in civil engineering, foundation engineering and major building construction. Over 85% of its annual turnover of £430m is from within Hong Kong where it claims a 10% market share.

Jardine Matheson owns the other 50% of the company.

Balfour Beatty chief executive Mike Welton said: "The group's strategy is to expand, within its core competencies, in geographic markets with good long-term prospects. Gammon is already a leader in its principal market and, with a strong partner in Jardine Matheson that has significant regional presence, we see excellent growth potential.

"Balfour already has a civil, electrical and mechanical engineering business in Hong Kong [with an annual turnover of £71m] and understands the market well. This transaction will constitute a step-change in our already successful presence in an attractive market."

In the period 1999-2003, Gammon's profit margin after tax averaged 2.5%.