Balfour Beatty, the international engineering, construction and services group, has signed a memorandum of understanding with Jardine Matheson and Skanska with a view to acquiring Skanska’s 50% interest in Gammon, the Hong Kong-based construction company.
Jardine Matheson owns the other 50% of the company.
Balfour Beatty will pay HK$510 million for Skanska’s interest, subject to detailed due diligence which is expected to be completed during June 2004.
Gammon is a broad-based construction group, which has an overall market share of approximately 10% in Hong Kong where over 85% of its business is conducted. The company, which has other businesses in China and Singapore, had sales in 2003 of approximately HK$6 billion.
Gammon’s main business is in civil engineering, foundation engineering and major building construction. It also owns a number of smaller businesses which support its main contracting activities. Its principal customers are the Hong Kong Government and its agencies, Hongkong Land, a Jardine Matheson associate, the Swire Group, Kowloon Canton Railway Corporation and Mass Transit Railway Corporation.
As a whole, it currently has a confirmed order book of over HK$8 billion. In the period 1999-2003, its profits after tax averaged approximately 2.5% of sales. As part of the transaction, Balfour Beatty’s existing Hong Kong business will be merged with Gammon