LONDON (ShareCast) - (Sharecast News) - Defence and aerospace engineer Babcock said it has sold its Frazer-Nash Consultancy to US peer KBR for £293m as part of its disposal programme to bolster its balance sheet.
Frazer-Nash provides engineering and technology services in the marine sector from a network of nine UK and four Australian locations. The consultancy, which Babcock acquired in 2007, employs around 900 people.

The sale, subject to clearance by the Australian foreign investment authority, forms part of Babcock's targeted disposal programme, which aims to generate at least £400m in the next year. Proceeds from this transaction will be used to reduce net debt which stood at £1.35bn at the end of March.

Babcock last month plunged to a £1.6bn loss for the year after revealing a £2bn write-down on the profitability of its contracts - £300m more than forecast by the company in April.

The company manages naval bases and looks after submarines and counts the UK Ministry of Defence as its biggest customer. The Covid pandemic has hurt its civil aviation business while social distancing rules have hit productivity and margins, as many of its jobs involve working in close proximity such as in ships and submarines.

"We are making real progress on our plan to streamline and focus the group on our key markets," Chief Executive Officer David Lockwood said, adding that the unit was a good fit for KBR.

Analysts at Shore Capital said the deal takes Babcock "a substantial way" towards its debt reduction target and marked the shares a 'hold'.

"Whilst challenges remain for Babcock to overcome in the medium term, this is a positive step, in our view," they said in a note.

Email this article to a friend

or share it with one of these popular networks:

• DIGG
• FACEBOOK
• STUMBLEUPON
• MIXX
• YAHOO BUZZ
• DELICIOUS
• REDDIT
• NEWSVINE