Carillion in merger talks with Balfour Beatty

WOLVERHAMPTON-based construction and support services firm Carillion is in merger talks with rival Balfour Beatty.

In an announcement to the London Stock Exchange Carillion confirmed that discussions are taking place.

London-headquartered Balfour Beatty is the UK’s biggest construction firm and a figure of £3bn has been put on the value of the merged firms.

Balfour Beatty has major projects and construction operations based in Birmingham.

In its statement Carillion said: “In view of recent media speculation the boards of Carillion and Balfour Beatty can confirm that, following an approach from Carillion to Balfour Beatty, they are engaged in preliminary discussions in relation to a possible merger of Carillion and Balfour Beatty.

“The boards of Carillion and Balfour Beatty believe that the merger of the two groups has the potential to create a market leading services, investments, and construction business of considerable depth and scale. Work is now underway to develop a strategy and outline business plan for a combined entity, underpinned by the evaluation of achievable synergies, future financing arrangements and a number of other essential supporting work streams.

“In evaluating the merits of the merger, the two boards will, inter alia, wish to be satisfied that such a merger would lead to very significant value creation for the benefit of both sets of shareholders.

“The two parties have agreed that Balfour Beatty’s publicly announced sale process for Parsons Brinckerhoff, which is already underway, will proceed unaffected by this announcement, subject to achieving acceptable value and terms.”

Carillion said no final decision has been reached regarding the structure of any merger.

Under stock market rules, the firms will have until 5pm on August 21 to announce whether a merger will take place.

Bankers at Lazard are understood to be advising Carillion, while Balfour Beatty is being represented by Goldman Sachs.