Partly Cloudy

Partly Cloudy

max temp: 8°C

min temp: 8°C

ESTD 1874 Search

Construction: Balfour Beatty rejects ‘opportunistic’ takeover approach from Carillion

15:22 15 August 2014

Balfour Beatty has set out its reasons for rejecting a takeover approach from Carillion.

Balfour Beatty has set out its reasons for rejecting a takeover approach from Carillion.

Balfour Beatty

Construction giant Balfour Beatty has set out a detailed rejection of the latest merger advances by Carillion after it turned up the pressure by claiming the tie-up could bring £175million in annual cost savings.


Balfour said the offer was unchanged from a proposal it had turned down earlier this week, and reaffirmed its rejection, while spelling out its doubts about the synergy claims.

It described the merger approach as “opportunistic” and reiterated that it had a “clear standalone plan for delivering value”.

However analysts at Investec believe that resisting a deal would prove a missed opportunity for troubled Balfour, which earlier this week disclosed a 53% slump in half-year profits, and is still looking for a new chief executive after the departure of Andrew McNaughton.

Balfour revealed on Monday that executive chairman Steve Marshall met Carillion counterpart Philip Green for talks a week before following the rejection of an earlier proposal.

But the potential tie-up has foundered on Carillion’s wish to cancel Balfour’s planned sale of its US business Parsons Brinckerhoff.

Balfour’s latest statement comes a day after Carillion set out what it said were the powerful financial benefits of creating a £3billion combined group, and disclosed that it had been in talks with major shareholders.

Carillion has also pledged an additional 8.5p per share dividend for Balfour investors.

Balfour responded to the pressure by saying it had “serious reservations” about the claims for synergies.

Today, in a more detailed response, the group that the proposals would mean cutting the size of its UK construction business by two-thirds, eating into potential profitability gains at a time when it looks well-placed to benefit from a recovery in the sector.

It also highlighted the risks inherent in executing a merger deal, saying: “The implementation programme would be complex, requiring simultaneous business restructuring, integration and outsourcing, at the same time as a significant IT change programme which is already under way.”

Balfour, whose UK Rail operations include bases in Ipswich and Colchestr, added that it had decided to sell the Parsons Brinckerhoff business in the US “as it did not deliver material competitive advantage for the group and added significant complexity”.

The sale process was “well advanced” and terminating it risked “damaging a significant part of the value of Balfour Beatty”.

Investec analyst Andrew Gibb said: “Unless Steve Marshall has a rabbit up his sleeve in terms of another suitor post a disposal of Parsons Brinckerhoff, the board’s rejection of Carillion’s proposed merger is likely to prove a missed opportunity for the shareholders of Balfour Beatty.

“In our view, Carillion’s merger looks compelling and far more attractive than relying on a management team at Balfour Beatty that has presided over shareholder value destruction in the past few years. A standalone Balfour Beatty does not look attractive, the Carillion deal does.”



Welcome , please leave your message below.

Optional - JPG files only
Optional - MP3 files only
Optional - 3GP, AVI, MOV, MPG or WMV files

Please log in to leave a comment and share your views with other East Anglian Daily Times visitors.

We enable people to post comments with the aim of encouraging open debate.

Only people who register and sign up to our terms and conditions can post comments. These terms and conditions explain our house rules and legal guidelines.

Comments are not edited by East Anglian Daily Times staff prior to publication but may be automatically filtered.

If you have a complaint about a comment please contact us by clicking on the Report This Comment button next to the comment.

Not a member yet?

Register to create your own unique East Anglian Daily Times account for free.

Signing up is free, quick and easy and offers you the chance to add comments, personalise the site with local information picked just for you, and more.

Sign up now

A file picture of the Sanofi factory in Haverhill.

More than 50 jobs are to be axed at the Haverhill site of pharmaceutical group Sanofi.

Georgi Rollings, left, and Emma Lawrence of Starfish Accounting.

An Ipswich based provider of online company secretarial software has reached the landmark milestone of having 10,000 users.

Robert Hughes, managing director of Hughes Electrical, and Andy Yallop, store manager, at the company's new branch in Bury St Edmunds.

Hughes Electrical has opened the doors of its new store in Bury St Edmunds following a £200,000 investment which has also created six new jobs, doubling the size of its workforce in the town.

Barclays has been fined £72m by the Financial Conduct Authority.
Photo: Jonathan Brady/PA Wire

Banking giant Barclays has been fined £72million by the City watchdog for failing to handle potential financial crime risks relating to a £1.88billion transaction for ultra high-net-worth clients.

Members of the Suffolk Chamber of Commerce team outside the chamber's offices at Felaw Maltings in Ipswich.

Suffolk Chamber of Commerce is among the nominees in two categories of the British Chambers of Commerce Awards, which are due to be announced at a ceremony in central London tonight.

Ipswich council leader David Ellesmere at the former sugar beet factory site off Sproughton Road.

A new Enterprize Zone involving 10 development sites across East Anglia, with the potential to create 18,500 jobs, was announced by Chancellor George Osborne today.

Natalie Moloney, of Woodbridge events firm Pink Lemonade Productions.

An entrepreneur is up for a fifth business award since her event planning company launched last year.

The Chancellor of the Exchequer, George Osborne, delivering his joint Autumn Statement and Spending Review to MPs in the House of Commons
Photo: PA Wire

The Chancellor’s Autumn Statement and Comprehensive Spending Review today divided opinion between unions employers.

Tony Willson, managing director of Helmsman Services.

Colchester-based training specialist Helmsman Services has secured the largest contract in its 17 year history, for its construction-specific e-learning health and safety courses.

Thomas Cook has reported its first annual profit for five years.

The boss of holiday firm Thomas Cook said yesterday that disruption experience since the deadly terrorist attacks in Tunisia, Egypt and Paris was “unprecedented” in his 30-year career.

Most read

Most commented

Topic pages

Local business directory

Our trusted business finder

Property search

e.g. Oxford or NW3
Powered by Zoopla

Digital Edition

Read the East Anglian Daily Times e-edition today E-edition

Great British Life

Great British Life
MyDate24 MyPhotos24