Balfour Beatty Share Discussion Threads

[compound_dave] 05/12/2014 22:07

Anybody know when we're getting paid for the Parsons sale and how much is being passed back to shareholders?

[cockneyrebel] 05/12/2014 19:38

LONDON--John Laing Infrastructure Fund (JLIF.LN) Friday responded to Balfour Beatty's rejection of its billion-pound ($1.6 billion) offer proposal for Balfour Beatty PLC's (BBY.LN) public-private partnership portfolio, saying Balfour is over-optimistic about the assets' value.
The infrastructure investor, which also disclosed that a lower proposed offer for the assets was dismissed in May, declined to call time on its attempt to win control of the portfolio of hospitals, schools and highways.
"JLIF continues to believe shareholder value for Balfour Beatty will be maximised by these assets being owned by an infrastructure fund with a lower cost of capital, which specialises in investing in low risk, operational infrastructure assets," JLIF said.
JLIF criticized Balfour's reference to the disposal in October of a hospital in West Yorkshire for 28% above the directors' valuation as support for its view of the portfolio's overall worth.
"JLIF believes this is overly optimistic, considering the evidence from the many transactions in which JLIF has been involved over the intervening months," JLIF said.

[smurfy2001] 05/12/2014 17:13

JLIF do one you bunch of chancers.

[neilyb675] 05/12/2014 16:34

John Laing Infrastructure Fund Ltd ("JLIF") is disappointed that the Board of Balfour Beatty plc ("Balfour Beatty") has chosen not to engage in constructive discussions with JLIF to unlock the value of its PPP Portfolio (the "Portfolio").

JLIF first approached Balfour Beatty in May 2014 with a proposal that attached up to a £200 million premium to the then Balfour Beatty directors' valuation of £766 million, leading to an indicative valuation for the entire Portfolio of a little under £1bn. This proposal was rejected.

On 1 December 2014, having reviewed the Balfour Beatty directors' portfolio valuation in August, taking into account disposals and new investments, JLIF made a non-binding proposal to acquire the entire Portfolio for approximately £1bn in cash, equivalent to 145 pence per Balfour Beatty share.

Without access to the project data, any discussions with Balfour Beatty or further information, it is difficult to understand the basis on which Balfour Beatty is anticipating a substantial increase in valuation. The Balfour Beatty announcement this morning appeared to use the price of the recent sale of one asset for £61.5 million as evidence to support a substantial uplift in valuation for the entire Portfolio. JLIF believes this is overly optimistic, considering the evidence from the many transactions in which JLIF has been involved over the intervening months.

JLIF continues to believe shareholder value for Balfour Beatty will be maximised by these assets being owned by an infrastructure fund with a lower cost of capital, which specialises in investing in low risk, operational infrastructure assets.

JLIF's proposal would allow Balfour Beatty to:

· Realise a certain and significant cash return for its shareholders, rather than relying on intermittent disposals in varying market conditions;

· Reduce its group costs;

· Further reduce the pension scheme liabilities;

· Improve the capital structure of the residual group;

· Continue its involvement in supply chain contracts and therefore retain any synergistic benefits; and

· Achieve the Board's own stated objective of reducing complexity in the group.

JLIF awaits with interest another revised valuation of the Portfolio from Balfour Beatty and in the meantime will continue to evaluate all other options for unlocking the Portfolio. A further announcement will be made if and when appropriate.

[cyberian] 05/12/2014 14:14

See the FT is suggesting that the market is already expecting a "huge" profit warning in January as a consequence of the KPMG review, but that the market will discount write-downs and goodwill. Once again I would think that any new bidders will wait to see whether the numerous profit warnings in recent times go further than the expected loss of any profits for 2014. The BBY Board appear ready to face-off any approaches until they are able to look in detail as to the KPMG complete review and the latter's recommendations. All a bit worrying when we all know that the management has dropped the ball over the last year or so. I just hope that the KPMG report is not going to reveal something unexpected. Certainly the new CEO will need to bolster the management team asap. However, great to see the recovery in the share price continue.

[dealy] 05/12/2014 10:49

why would JL be able to extract more value from these assets than Balfours when they are already synergy producing? Makes no sense. Balfours is a big player in this space and is now well capitalised after the US spin off.

The City will wake up to this soon.

I remember when Barratt were 40p. Now 470p.

[cyberian] 05/12/2014 10:10

Doubt that JL will try again after seeing what happened with the Carillion bid in the summer...I sense that it was an opportunistic move hoping or half guessing that the KPMG would throw-up some big negatives. Also with the new CEO still a few weeks away from getting into the hot seat added to their appetite to try their luck. Guess again it is down to being patient but with the Board response today on KPMG timing issues etc. at least the new guy will have more time to weigh-up a strategy going forward. Pity we have to wait until the latter part of January to know what KPMG have found but it may not be too bad.

[nw99] 05/12/2014 09:48

We are trading up looking for a revised bid

[smurfy2001] 05/12/2014 09:40

Very happy with the rejection, well done board.

My concerns no doubt read.

[dealy] 05/12/2014 09:25

This stock is so undervalued and overlooked. Basically all small and mid cap stocks at the moment fall under this category because the institutions are only buying mega caps or bonds.

[nw99] 05/12/2014 08:02

We are up nice

[dealy] 05/12/2014 07:46

it wasn't a bid for the company just a bid for a division.

[nw99] 05/12/2014 07:30

Not happy oh well .. Stay with it till next year for the next bid

[dealy] 05/12/2014 07:21

well, everybody wants to get balfour on the cheap and the board is saying "no". and they are right. nearly 800m quid pulled in from the sale of the US business. The PFI business worth possibly 1.5 billion including synergy effects. why should the board give the company away for peanuts.

a little patience here by investors and these shares will be back to 300p next year.

[neilyb675] 04/12/2014 16:22

div payment tomorrow, taking mine in DRIP shares

[cyberian] 04/12/2014 10:37

It looks as though some investors/holders are getting a bit anxious over what the KPMG UK contracts review will reveal. Hope that there will not be a leak, but then again that may flush-out other interested parties. Pity the new CEO doesn't start until the new year.

[neilyb675] 03/12/2014 16:15

decent post cyberian, worth a thumbs up imvhpo

[cyberian] 03/12/2014 10:51

Got to be a bit patient to see who/when others show their hand, but it looks as though some break-up move will happen, sadly. The Institutions will have some input I guess or at least have a strong view as to what is in their best interests after the recent US sale debacle, and the earlier approach by Carillion.
My guess is that reported trade of 100,000 at 10.15 at a price of 188.6p (listed as a negotiated trade NT)was in fact a worked buy as the MM's had drop the price to attract sells at lower levels earlier, and the share price trade range immediately improved after the recorded trade. So, my guess is that there are selective buyers in the wings that have set their own price target to enter. Who knows I may be totally wrong?

[neilyb675] 02/12/2014 16:19

decent post cyberian, worth a thumbs up imvhpo

[cyberian] 02/12/2014 10:42

I can see the possibility of Carillion (CLLN) coming back into the frame here perhaps before the Feb. 2015 date. There could be some mutual agreement between the two parties to re-consider a joint venture or a full merger in the event of things hotting up with JLIF against their best interests, taking the longer term view. The low volume in the shares traded (so far) today suggests some uncertainty as to where/how the next move will come and most investors are sitting on their hands. Of course there could be other names about to enter as Balfour Beatty are still a major force/name in the UK and to a lesser extent in the US,and despite some poor judgements recently they are still winning some pretty impressive/large contracts. The new CEO may not have the benefit of time to take some planned early initiatives when he formally starts in January, although I would imagine that he has gone through a detailed review of all aspects of the business he has inherited.

[smurfy2001] 01/12/2014 16:56

John Laing Infrastructure Fund has made a £1bn offer for Balfour’s portfolio of public private partnership assets, which operate in education, health and other sectors. JLIF has fallen 2.3% to 120.4p after it said it would issue shares to fund the transaction.

But analysts suggested the offer price was on the low side and could attract rival bidders. Meanwhile Carillion, which was rebuffed in an offer for the whole of Balfour Beatty, could return in February.

[smurfy2001] 01/12/2014 16:55

Oriel issued a downbeat note of JLIF on the news:

Whilst at this stage there is a lack of information on the proposal, we do think it is likely that in addition to JLIF there are likely to be a number of parties interested in these PFI assets. A large queue of potential buyers could well form, with the danger being that the ‘winning bidder’ is likely to end-up paying a relatively high price for the assets. A £1bn equity issue would double JLIF’s size from its current market cap of £1bn and some investors are likely to welcome the increased stockmarket liquidity associated with an enlarged JLIF. The market currently seems to have an insatiable appetite for listed infrastructure, with this demonstrated by the mid-teen premia that many of the funds are currently trading on. However, we do think there is likely to be some short-term indigestion if the market has to absorb £1bn of equity from JLIF. We re-iterate our reduce recommendation with a fair value of 113p and we think it likely that the whole listed infrastructure fund sector may see some price weakness in the short-term given the size of this potential equity issuance.

[smurfy2001] 01/12/2014 16:55

Liberum said:

We do not think that this is a very generous offer. Balfours’ own conservative directors value was £1,051m at the interims, although there will have been some changes since then including the closure of the Greater Gabbard OFTO |(£15m of equity), the unwinding of the discount and disposals (we assume gains of £33m in the second half or proceeds of £66m assuming two time book). In our mind, even if all of the assets were sold for this low number, the PPP business would still have a material value, note the £170m of equity expected to be invested over the next two years and the likelihood of investments beyond that.

While the Laing offer looks low, it does highlight the significant value of the business. Balfour Beatty’s market cap is £1.3bn; there is at least £1.0bn of PPP assets, we estimate £0.3bn of residual PPP value, we estimate £490m of value on Support Services and £70m of pro forma average cash (£220m of year end cash). This indicates a negative value of £0.6bn for the rest of the business, which is too low, given that most of Construction is performing satisfactorily and the losses can be discontinued (albeit with significant write-offs in January).

[smurfy2001] 01/12/2014 15:19

It is thought likely that Balfour Beatty will resist John Laing’s overtures. The deal would result in the break up of the construction company.

Analysts at Canaccord Genuity called the move a "cheeky" as it "provides a fire sale value but a significant lump of cash".

Canaccord said the offer undervalues the assets and while it would provide "immediate cash creation it will remove a future growth engine for the group".

Analysts at Westhouse Securities said that the bid appeared to undervalue the Balfour Beatty’s investment portfolio and a raised offer might follow.

[smurfy2001] 01/12/2014 15:05

The company will be valued far less so l wonder what this will do to the share price after the deal is done?

What would they do with the cash? A large dividend? It would leave any shareholder with a large loss on the shares themselves after ex-divi assuming a large pay day.

Purchase a company? Maybe.

Possibly a significant buy back?

I want to know what the CEO will do asap.