Dubai-based Dutco says it has finalised the acquisition of the minority shares held by the UKs Balfour Beatty within its joint companies Dutco Balfour Beatty, Dutco Construction Company and BK Gulf.
Dutco stressed that there will be no major changes to its business after Balfour Beattys departure. There will be no fundamental change to our existing operations other than our continuous drive to become more efficient and productive in the execution of our projects, said Dutco Group chief executive Tariq Baker.
Baker added that the company also plans to develop new relationships for its construction businesses. Our companies will continue to focus fully on serving our existing customers and we will also look to develop new relationships across our wide construction offering, he said.
Balfour Beatty said on 21 February that it had reached an agreement to sell its entire shareholding in the local/UK Dutco Balfour Beatty (DBB) and BK Gulf to the local Dutco Group for £11m ($13.8m).
The deal involves Dutco assuming responsibility for Balfour Beattys guarantees of bonding obligations.
It has been reported that Balfour Beattys Middle East business had an operating margin of -17 per cent in 2016, and analysts say the move to exit the region will have a limited impact on the firms valuation and a positive impact on investors view of execution.
The deal was expected, and is part of Balfour Beattys strategy of exiting other international markets such as Indonesia and Australia so that it can focus on its chosen markets, in the UK, the US and the Far East.
Dutco Balfour Beatty has a long history in Dubai. It was formed in 1976, when Dubai Transport Company (Dutco) and Balfour Beatty teamed up for work on the Jebel Ali port. After the project was completed, DBB worked on several major schemes including: the Arrivals Terminal at Dubai International airport; the G station power and water desalination facility; Dubai Mall; various interchanges on Sheikh Zayed Road; and the Creek extension in Business Bay.
Balfour Beatty is the latest international contractor to say it will leave the region. Last year, South African contractor Murray & Roberts said it will no longer operate in the Middle East after completing its ongoing schemes.
Balfour Beatty exit marks the end of an era for Dubai construction
Dubai tourists at Dubai Mall fountain
The announcement by Balfour Beatty that it will sell its shares in Dubai-based Dutco Balfour Beatty (DBB) signals the end of an era for contracting in Dubai.
The UK contractor says the move to sell its shares in DBB to its local partner Dutco is part of its broader strategy of retreating from international markets it is also leaving Australia and Indonesia.
Balfour Beatty is not completely retreating from the world stage and it says it will not focus on chosen markets in the UK, US and the Far East. The fact that the Middle East is not one of those chosen markets is testament to the difficulties that international contractors now face when operating in Dubai and the rest of the region. Read more
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