Babcock sells MoD contractor Frazer-Nash Consultancy to US agency
Babcock is set to pocket £ 293 million after selling a consultancy that has contracts with the Department of Defense.
he London-listed company said it would sell Frazer-Nash Consultancy to KBR, an American engineering giant.
It marks the end of a 14-year partnership between Babcock and the Surrey-based consultancy that emerged from the classic car manufacturer Frazer-Nash.
During this time, the consulting firm has grown, said Babcock. It currently employs around 900 people in the healthcare, energy, defense and transportation sectors.
The company has nine UK offices and four in Australia and last year had sales of just over £ 100m and pre-tax profits of £ 13.5m.
The transaction is subject to approval by the Australian authorities, but Babcock shareholders will not receive a vote on the sale.
Last month, Babcock reported an operating loss of £ 1.6 billion for the year and net debt – though declining – was £ 1.4 billion.
Chief executive David Lockwood told the Financial Times that the company has been able to turn around without raising cash from shareholders.
Babcock had already announced plans to sell £ 400 million worth of businesses over the next 12 months. The sale of Frazer-Nash Consultancy will fill much of that void and the money will be used to pay down debt.
On Friday, Mr. Lockwood said, “We are making real progress on our plan to streamline the group and focus on our key markets.
“Divesting companies through our targeted divestment program worth at least £ 400 million will allow us to reduce complexity and increase our focus as we re-empower Babcock.
“Frazer-Nash Consultancy is a good fit for KBR and I wish you every success as the company continues to grow.”
Frazer-Nash traces its roots back to the 1920s when Archie Frazer-Nash founded the automaker of the same name.
The company began manufacturing machine guns during World War II and held government contracts after the war.
In 1971 the consulting department of the Frazer Nash Group was founded. It was bought by its own management in 1990.
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