Balfour Beatty, the international engineering and construction professional services and investment group, has confirmed that it is to acquire Parsons Brinckerhoff inc., one of the world’s leading professional services companies, for US $626 million - around £380 million.

The company will be issuing a fully-underwritten 3 for 7 Rights Issue to raise approximately £353 million to substantially finance the acquisition.

Parsons Brinckerhoff is an employee-owned, US-based international professional services firm focused on infrastructure with a network of over 100 offices and over 12,500 employees. The Group’s worldwide revenue in the year ended 31 October 2008 was US$2.34 billion.

Balfour Beatty’s Board said that the Acquisition would accomplish a number of Balfour Beatty’s objectives by establishing a global professional services business of scale, with over 14,000 employees, create a leading position in US civil infrastructure and enhance its global reach, as well as strengthening its position in existing geographical markets.

Commenting on the acquisition today, Balfour Beatty Chief Executive, Ian Tyler, said:

“The acquisition of Parsons Brinckerhoff represents the realisation of a number of key strategic objectives for Balfour Beatty. In particular, we believe it makes us one of the world’s major players in professional services, substantially strengthens our US presence and puts Balfour Beatty in an excellent position to take advantage of increased infrastructure spending. It is a key step in becoming a global integrated leader in infrastructure services.”

Keith Hawksworth, Chief Executive Officer of Parsons Brinckerhoff, said

“We are delighted to be joining the Balfour Beatty Group. We believe there is a clear fit between our two closely-aligned companies. We are very enthusiastic about what we see as the enormous potential that can be realised by working together in the future.”

In a statement issued today, the Board set out its reasons for the acquisition:

“ The Board believes that the combination of Balfour Beatty and Parsons Brinckerhoff would represent the successful realisation of a number of key strategic objectives, in particular, the development of a global professional services business and the further strengthening of Balfour Beatty’s US presence. The Board believes that the Enlarged Group will have enhanced long-term growth potential through its leading position in the international markets for infrastructure services and from increased infrastructure spending in both developed and emerging markets. Adding Parsons Brinckerhoff’s successful and well-established international professional services business to Balfour Beatty’s very significant construction, existing professional services and investment businesses will create a group with significantly enhanced capabilities to address the needs of key infrastructure customers internationally.

The Enlarged Group will have a presence across the entire life cycle of major infrastructure assets – from conception and funding to construction, operation and maintenance. This will enable the Enlarged Group to provide customers with a comprehensive range of services relevant to all stages of infrastructure asset development and to operate in a wider range of geographies. Additionally, the Board believes that the trend of major infrastructure owners increasingly looking for an integrated service approach from their key partners and suppliers will continue in the future, providing increasingly favourable market dynamics for the Enlarged Group”.

In the UK, Balfour Beatty said it had made significant progress in recent years in expanding its professional services business to provide customers with an integrated offering from upstream professional services to downstream delivery capabilities. The Board said that the combination in the UK of Parsons Brinckerhoff and Balfour Beatty Management teams would create a UK business of scale and give them an improved ability to attract highly-skilled professionals to work on some of the UK’s leading infrastructure projects for public sector and regulated customers.