Balfour launches bid for Birse

Balfour Beatty has launched a £32m bid for Birse. The bid is backed by Birse's board.

Balfour's offer values at each share at 16.6p. representing a premium of 23% on the 13.5p closing price on Friday.

Birse has had a troubled past. The statement released to the City this morning said: "The offer represents a successful conclusion to the review of the Birse Group's options by its board and advisers, prompted by the narrowing of Birse's capital base and relatively high levels of gearing." Birse generated a pre-tax profit of £370,000 on a turnover of £340.5m in the year to 30 April 2005. At that point it had net assets of £12.4m.

Acquiring Birse would strengthen Balfour's capabilities in coastal and rail-related civils and add to its engineering and project management skills in water and other process sectors.

Birse's on-going building business in the North will become part of Balfour's Mansell subsidiary.

At this stage, there is no indication as the future of Birse's senior management and the company's name.

Balfour chief executive Ian Tyler said: "The acquisition of Birse is a substantial step in delivering Balfour's stated strategy of expanding and strengthening its regional presence in the UK civil engineering and building sectors.

"We attach great importance to the skills and experience of Birse's management and employees. We expect them to play an important role in the further development of the enlarged business."

Birse chairman Peter Watson said: "With opportunities on the increase in our main infrastructure markets, the benefit of the stronger covenant offered by Balfour will enable our business to take a leading position in meeting that demand and enhance our service proposition to customers."