Defence giant Babcock has today announced that it will sell engineering subsidiary Frazer-Nash Consultancy to fellow infrastructure player KBR for £293m.
The sale is the first step in a plan to cull £400m worth of contracts over the next 12 months to fix the FTSE 100 firm’s battered balance sheet.
Shares in the London-headquartered firm rose 6.2 per cent in the first hour of trading.
Frazer-Nash, which is in Babcock’s maritime division, employs about 900 people and took revenues of £100m last year.
It delivers engineering solutions across a portfolio of 13 locations in the UK and Australia.
Last month Babcock announced that it would streamline its business to focus purely on being a international aerospace, defence and security play.
It came on the back of a year in which the firm booked a £1.6bn loss due to £2bn worth of cancelled contracts.
Chief executive David Lockwood said: “We are making real progress on our plan to streamline and focus the group on our key markets.
“Divesting at least £400m of businesses in our targeted disposals programme will enable us to reduce complexity and increase our focus as we return Babcock to strength. Frazer-Nash Consultancy is a good fit for KBR, and I wish them every success in growing the business further.”
Babcock is one of the Ministry of Defence’s (MoD) biggest suppliers, and a key partner in the building of new ships for the Navy’s fleet.
As part of its turnaround, it plans to sell its oil and gas aviation business which transports workers to rigs and is reviewing parts of its aerial emergency business, which provides search and rescue, firefighting and medical services.