Acquisition

Balfour Beatty PLC
09 August 2004


9 August 2004



                      BALFOUR BEATTY ACQUIRES 50% INTEREST 
            IN GAMMON IN HONG KONG FOR HK$475 MILLION (£33 MILLION)
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            Acquisition creates a major Balfour Beatty presence in a
        substantial regional market with good long-term growth potential
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Further to its announcement of 27 May 2004, Balfour Beatty, the international
engineering, construction and services group, announces today that, following a
period of due diligence, it has completed the acquisition of Skanska's 50%
interest in Gammon, the leading Hong Kong-based construction company. Jardine
Matheson owns the other 50% of the company. The consideration paid for Skanska's
interest was HK$475 million (£33 million) in cash.

Gammon is a strong, broadly-based construction group, which is the market leader
in Hong Kong. It also has established businesses in China and Singapore.
Gammon's main business is in civil engineering, foundation engineering and major
building construction. It also owns a number of smaller businesses which support
its main contracting activities.

Commenting on the acquisition, Balfour Beatty Chief Executive, Mike Welton,
said: 'The Group's strategy is to expand, within its core competences, in
geographical markets with good long-term prospects. Gammon is already a leader
in its principal market and, with a strong partner in Jardine Matheson who has
significant regional presence, we see excellent growth potential for our core
businesses in civil and power engineering, rail engineering and building and
construction services.'

Gammon's average operating profit margin over the last five years has been
approximately 2.5%. In 2003, Gammon had sales of HK$5.7 billion (£404 million)
and profits before tax of HK$100 million (£7 million). 2003 results were
impacted by one-off issues and more challenging market conditions in Hong Kong
than in recent years. These factors have been reflected in the consideration
paid.

Gammon has a current net cash balance of approximately HK$471 million
(£33 million) and an order book of over HK$7.5 billion. On 31 December 2003, it
had net assets of HK$758 million (£53 million).

As part of the transaction, Balfour Beatty's existing HK$1 billion per annum
Hong Kong business will be merged with Gammon, enhancing Gammon's civil
engineering capacity and adding a powerful electrical and mechanical capability
to Gammon's existing substantial footprint.

                                      ENDS

Enquiries to:
Tim Sharp
Tel: [phone]
www.balfourbeatty.com




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