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1. Balfour takes 50pc stake in Gammon Skanska for $510m

2. Henderson likely front runner for $1b URA project

1. Balfour takes 50pc stake in Gammon Skanska for $510m
Keith Wallis, The Standard 28 May 2004

British construction firm Balfour Beatty has agreed to pay HK$510 million to buy the 50 per cent stake in Gammon Skanska, one of Hong Kong's top contractors, currently held by Swedish construction company Skanska. The remaining half share will continue to be held by Jardine Matheson.

Balfour Beatty, Skanska and Jardine Matheson have signed memorandum of understanding agreeing to the deal subject to detailed due diligence which is expected to be completed next month.

Balfour Beatty plans to merge its existing Hong Kong business with Gammon in a move that will enhance Gammon's civil engineering experience and add an electrical and mechanical engineering capability.

Mike Welton, Balfour Beatty chief executive, said the ``acquisition will significantly strengthen Balfour Beatty's presence in an attractive market. Gammon has a consistently profitable record and substantial cash balances''.

Gammon Skanska had sales of about HK$6 billion last year and has a confirmed order book of more than HK$8 billion. Skanska said its share of Gammon Skanska's earnings last year amounted to 34 million kronor (HK$35.4 million) last year.

Gammon Skanska, which specialises in building, heavy civil engineering such as roads and bridges, and foundations currently has about 10 per cent of the construction market in Hong Kong.

The firm is currently building the Hong Kong section of the Shenzhen western corridor bridge link to Shekou and part of the connecting Deep Bay highway. It also built Chater House in Central and was involved in the construction of the Tsing Ma bridge.

Balfour Beatty recently completed an extension to the passenger building at Hong Kong International Airport.

It was part of a consortium which built the original building in the mid-1990s. It also constructed Nam Cheong station on the KCRC's West Rail line.

Skanska said: ``The final sales contract is expected to be signed this summer. The sale is part of Skanska's strategy of focusing on achieving a leading position in its selected home markets.''

These include Europe and the United States.

It added: ``The sale price corresponds to the group's book value and consequently there is no impact on Skanska's earnings. Cash flow is affected positively by this amount, and the group's capital employed is reduced by the corresponding amount.''

Balfour Beatty's Welton said the purchase ``provides a strong established base to develop as a regional contractor''.

There are Gammon Skanska firms in the mainland and Singapore. Gammon also had a significant regional presence before the 1997 regional economic crisis, but the firm pulled out of most of these markets in the wake of falling workloads.

2. Henderson likely front runner for $1b URA project
Raymond Wang, The Standard 28 May 2004

At least 20 developers are expected to submit expressions of interest in a HK$1-billion urban renewal project in Tai Kok Tsui.

The redevelopment project - the third launched by the Urban Renewal Authority (URA) this year - is expected to attract bids from developers and West Kowloon landlords such as Henderson Land Development, Cheung Kong (Holdings), Sun Hung Kai Properties and Sino Land when the deadline expires today.

In March, Hong Kong Ferry (Holdings), controlled by property tycoon Lee Shau-kee's Henderson Land, agreed to pay the government HK$390 million, or HK$1,200 per square foot, in land premium for a residential project in Tai Kok Tsui.

The premium settlement is expected to become the reference level for other developers.

Centaline Surveyors associate director James Cheung said Henderson Land is likely to be the front runner and bid aggressively for this new Tai Kok Tsui project to strengthen its foothold in the district.

``The better-than-expected government land auction results boosted market sentiment and developers seeking to replenish land reserves will continue to take part in other upcoming tenders and auctions,'' he said.

According to the URA, the commercial and residential use site on Cherry Street covers about 48,500 square feet. The project, which will affect 420 households and 236 property owners, will generate more than 500,000 sq ft of commercial/office area. The residential area, measuring 357,394 sq ft in total, is expected to yield 606 flats when completed in 2008.

Homes for the elderly of about 11,800 sq ft and some 19,000 sq ft of open space will also be provided.

Qualified parties will be shortlisted and invited to submit a formal tender, the URA said.

Developers responded strongly to the URA's last two tenders.

This month, the authority said 14 developers had submitted tenders for the HK$1-billion urban renewal project on Johnston Road, Wan Chai. The tender award is expected to be announced soon.

The project is expected to provide about 190,000 sq ft of residential floor area and about 28,000 sq ft of commercial retail area when it is completed in 2007.

Last month, Sino Land outbid 13 developers for a HK$2-billion urban renewal project on Yeung Uk Road, Tsuen Wan.

Construction is due to start shortly on a residential and commercial complex at the 77,824 sq ft site, which could provide a total gross floor area of up to 490,000 sq ft.

The project is scheduled to be completed in 2007.