Carillion calls off Balfour Beatty merger

WOLVERHAMPTON-based construction group Carillion has called off its merger with rival Balfour Beatty after the latter rejected a revised offer.

In a statement Carillion said it was no longer pursuing the merger – although it has not ruled out tabling a further bid at some point within the next six months.

On Tuesday Carillion had upped its offer to its rival in a last ditch attempt to persuade the board to accept the terms of a merger which would create a £3bn business.

The Wolverhampton-based group said it had held additional talks with Balfour Beatty shareholders after which it had tabled the revised offer.

The deal proposed an all-share merger of Carillion and Balfour Beatty, with a 58.268% share for Balfour Beatty shareholders based on the current share capital of each company.

In addition to the interim dividend announced by Balfour Beatty last week and to the 2014 final dividend to which shareholders of the combined group would be entitled, Balfour Beatty shareholders would receive an additional cash dividend or equivalent of 8.5p per Balfour Beatty share, a move worth around £59m.

The newly-merged business would have a leadership team comprising Richard Howson, CEO; Richard Adam, CFO; and Philip Green, Chairman. Three Balfour Beatty non-executive directors would also join the new board.

The senior management team below board level would be drawn from both companies.

On the issue of the sale of the Parsons Brinckerhoff subsidiary, Carillion said it would cover the bidders’ reasonable costs in the event of the merger going ahead – up to £10m in aggregate.

The improved offer represented a premium of 36% to Balfour Beatty’s average price prior to July 24, the day news of the proposed merger first broke.

However, in a statement on Tuesday rejecting the offer, Balfour Beatty said the revised proposal again failed to address key concerns.

In its statement yesterday, Carillion said: “The board of Balfour Beatty has not agreed to Carillion’s proposal or to request an extension to the Put Up or Shut Up deadline which expires at 5pm tomorrow (August 21). Carillion therefore today announces that it is no longer pursuing such a merger.”

It adds: “Carillion reserves the right to announce an offer or possible offer for Balfour Beatty within the next six months following the date of this announcement.”

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