Balfour Beatty pulls the plug on £3bn Carillion merger after sale dispute
CONSTRUCTION giant Balfour Beatty has pulled out of a potential merger with Wolverhampton-based Carillion. The merger would have created a construction and support services group estimated to be worth around £3bn.
In a statement today, Balfour Beatty said it was terminating discussions with “immediate effect”.
The announcement hit Carillion’s share price with the company falling in early trading.
The stumbling block appears to have been Carillion’s insistence that the Parsons Brinckerhoff consultancy – which has an outlet in Birmingham – remain part of the new entity, a move at odds with Balfour Beatty’s plan to sell off the business.
Initial indications were that the sale would continue ahead of the merger.
“The termination of discussions follows Carillion’s wholly unexpected decision to only progress the possible merger in the event that Parsons Brinckerhoff remained part of the potential combined entity,” said Balfour Beatty in its statement.
“This change is contrary to the basis upon which the Balfour Beatty board agreed to engage in preliminary discussions. It is also contrary to the joint announcement released on July 24, 2014 which confirmed that the sale of Parsons Brinckerhoff would be unaffected by the merger discussions and also a presentation to Balfour Beatty’s board by Carillion on July 28, 2014. This change in the proposed terms is not acceptable to the board of Balfour Beatty.”
It said the statement had been made without the consent of Carillion, which has yet to make a statement of its own.
Balfour Beatty said it would now proceed in accordance with its own business plan, including the competitive sale process of Parsons Brinckerhoff; which it said was well underway.
It is also continuing with its search for a new group CEO.
Balfour Beatty said it was also confirming that there was no new information on trading since an update on July 3 and it would go ahead with the publication of its interim results on August 13, 2014.
