Overcast

Overcast

max temp: 9°C

min temp: 6°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.

shares

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.”

shares

0 comments

Welcome , please leave your message below.

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

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

Suspected gas explosion on Federick Road in Gorleston.

 Picture: James Bass

Two people have been taken to hospital following a suspected gas explosion near Lowestoft.

Cobbolds Point, Felixstowe, by Peter Smith, is on show as part of the Suffolk Creative Photographic Group exhibition at Woodbridge Library during March

From broody compositions to sun-kissed scenes – an exhibition of photographs currently on display at a Suffolk library has a bit of everything to offer.

Michael Davey, left

Tributes have poured in for a “hugely influential” teacher who will be “profoundly missed” by staff, students and parents of a Suffolk independent school.

Pupils at Sir Robert Hitcham's Primary School in Framlingham dress up as characters from their favourite books fo World Book Day.

The library came to life in the playground of a Suffolk school today.

Southwold Pier basks in the early morning spring sunshine

Spring is hitting the East with full force this weekend with temperatures expecting to reach the mid teens.

A pile up has blocked a road in Ipswich

Duke Street in Ipswich is blocked because of a five vehicle “pile-up”.

Former Ipswich Town manager Roy Keane

Former Ipswich Town manager Roy Keane is due to appear in court over an alleged road-rage row with a taxi driver.

The photo of police in Ipswich who served during the General Strike in 1926 which is being auctioned by Lockdales

A photograph of the men who kept order in Ipswich during the 1926 General Strike is to go under the hammer at auction.

Alex Till ( third from right at the front), chief executive of MENTA, has been appointed by the Newbury Community Association as chairman of the Newbury Community Centre Project Board.

A business leader has been appointed to bring his skills to a project for a brand new community centre on Bury St Edmunds’ Howard estate.

Jane Ireland is continuing Wally's café, which was run by her father in Long Melford.

The daughter of a former chef and cafe owner who died last month at the age of 84 has vowed to keep the memory of his legendary breakfasts and Sunday roasts alive.

Most read

Most commented

Topic pages