BALFOUR Beat ty has made around 23 acquisitions over the past five years but walked away from many other deals.
With the exception of Mansell ? which gave Balfour a significant exposure to social housing ? most have been bolt-on purchases, often taking the group further into existing market sectors.
Last week's acquisitions by Balfour of ground engineering specialist Pennine and German rail signalling business SBB fall into this category. Balfour said it is already a leader in piling through Stent, and Pennine, which specialises in treating poor ground and vibration techniques, should provide a complementary business with good growth prospects as more brownfield sites are developed.
Similarly, SBB ? a leader in installing German electrical signalling, largely through framework contracts for Deutsche Bahn ? fits Balfour's recent acquisition of another signalling operation, Bombardier's Solid State Interlocking arm.
Rather than ambitious mergers or diversifications, these acquisitions of medium-sized businesses driven by industrial logic seem to be setting the pattern for corporate activity among the major quoted contractors. Coming after Balfour's purchase of the US project management company JCM Group earlier this year and Carillion's acquisition of Planned Maintenance Group in March, it also suggests the majors are comfortable with a steady f low of deals.
While the large contractors are never likely to rival some of the deal-machines in the building materials sector, such as CRH, they do seem able to find reasonably priced targets. With Pennine, Balfour, whose results this week should have shown a healthy order book, is paying £8 million for a business with sales of £16 million and which made operating profits of £1.5 million in the year to March.
After the recent rise in the stock market and with the economy set to slow, more owners of private niche contracting businesses may regard this as a good time to sell up. The larger contracting groups that have the cash available will be one of their first ports of call.