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Balfour Beatty terminates Carillion merger talks

Balfour Beatty has terminated discussions with Carillion with regards to a possible merger.

The decision, with immediate effect, comes less than a week after the two construction giants confirmed they were in ‘preliminary discussions’ over a potential deal.

However, Balfour Beatty says the termination 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”.

Last week the two parties agreed that Balfour Beatty’s publicly announced sale process of its professional services division Parsons Brinckerhoff, which is already underway, would proceed unaffected by the potential merger.

The board of Balfour Beatty have stated that change in the proposed terms is not acceptable, and “will proceed in accordance with its own business plan, including the competitive sale process of Parsons Brinckerhoff currently well underway. It will also continue to actively progress its search for a Group CEO”.

In response to Balfour Beatty’s statement, Carillion stated that for the combination of the two businesses “to satisfy Carillion's requirements (as set out in the announcement last week), it would be essential to retain the stability and dependability of Parsons Brinckerhoff's earnings”.

It added: “The Board of Carillion is surprised by Balfour Beatty's reaction as the work to date has led to increased confidence in the potential to realise very material value for the benefit of both sets of shareholders.

A Stock Exchange statement added: The Board of Carillion continues to believe in the powerful strategic rationale of a combination and the capability of such a combination to create very significant shareholder value. The Board of Carillion will therefore give further consideration to its position in the light of its requirements that (i) due diligence would have to be concluded to its satisfaction; and (ii) the Boards of Carillion and Balfour Beatty would have to recommend a combination to their shareholders.

Photo shows Balfour Beatty/Carillion JV contractors on-site at Shoreditch during East London Line works in 2008. Copyright Adambro (Creative Commons)

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