Babcock to pocket £293m after selling a consultancy which has contracts with the Ministry of Defence

The London-listed business 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 which sprung out of classic carmaker Frazer-Nash.

In that time the consultancy has grown, Babcock said. It currently employs around 900 people working in the healthcare, energy, defence and transport sectors.

It has nine UK sites and four in Australia, reported revenue of just over £100 million last year and pre-tax profit reached £13.5 million.

The deal will need approval from Australian authorities, but Babcock shareholders will not get a vote on the disposal.

Last month, Babcock reported a £1.6 billion operating loss for the year, and net debt – although falling – lay at £1.4 billion.

Boss David Lockwood told the Financial Times that the business would be able to turn around without raising cash from shareholders.

Babcock had already revealed plans to sell businesses worth £400 million over the next 12 months. The sale of Frazer-Nash Consultancy will fill a large part of that hole, and the money will be used to pay off debt.

On Friday, Mr Lockwood said: “We are making real progress on our plan to streamline and focus the group on our key markets.

“Divesting at least £400 million 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.”

Frazer-Nash traces its roots back to the 1920s, when Archie Frazer-Nash founded the eponymous carmaker.

During the Second World War the company started producing machine guns, and it maintained Government contracts after the war.

In 1971 the consultancy wing of the Frazer-Nash group was founded. It was bought by its own management in 1990.