Balfour Beatty rejects new Carillion approach
Firm says new merger proposal still contains too many risks
Balfour Beatty has rejected a third approach from contractor Carillion about a possible merger.
The firm said that Carillion's revised offer, announced yesterday (19 August) "fails to address two key concerns", which were that a merger contained several potential risks, including a plan to reduce the scale of their UK businesses at a time when the market is set for a recovery, and a continued assistance that Balfour Beatty keeps US-based consultancy Parsons Brinckerhoff.
Balfour Beatty is currently in the midst of a sale process for the business, with reports suggesting that WSP has emerged as a frontrunner.
"Accordingly, the Board has unanimously concluded that the proposal is not in the best interests of its shareholders and has decided to reject the proposal," the company said in a statement this morning.
It added that the revised offer from Carillion, which increased the stake that Balfour Beatty shareholders would hold in the combined business to 58.27% - up from 56.5% previously, represented only a "small value change" when compared to the previous deal.
Carillion had also proposed a cash dividend, which valued Balfour Beatty at £2.086bn ($3.47bn), compared to £1.886bn ($3.13bn) previously.
Carillion had said that the proposed offer represented a 36% premium on Balfour Beatty's share price in the month prior to its initial offer.
It had also argued that merging the firms could create savings of around $290mn a year.
Both contractors have an active presence in the GCC. Carillion has a joint venture with Al Futtaim in the UAE and Saudi Arabia and trades as Carillion Alawi in Oman. It is currently working on the Phase IV expansion of the Madinat Jumeirah resort in Dubai and the Aldara Hospital and Medical Center in Riyadh.
Balfour Beatty, meanwhile, has a joint venture in Dubai with Dutco which is currently working on the expansion of the Dubai Mall project for Emaar Properties, and Parsons Brinckerhoff is joint project manager of the $7bn Saudi Landbridge project.