BALFOUR Beatty has announced it will not be merging with Carilion following weeks of intense speculation.
Carillion initially approached Balfour Beatty on 27 May 2014 with a nil premium merger proposal. Based on closing share prices on this date the implied ownership split would have been 51% of the combined entity to Balfour Beatty shareholders and 49% to Carillion shareholders.
Following several weeks of negotiations, Balfour Beatty agreed to engage with Carillion on the basis that Balfour Beatty shareholders got 56.5% to Carillion’s 43.5%, and the sale of US design and engineering subsidiary Parsons Brinckerhoff would go ahead as planned.
Both boards said they believed a merger of the two groups had the potential to create a market leading services, investments and construction business of considerable depth and scale. However, Balfour Beatty pulled out of the talks after what they described as “Carillion’s wholly unexpected decision to only progress the possible merger in the event that Parsons Brinckerhoff remained part of the potential combined entity”.
Balfour Beatty said this change was contrary to the basis upon which they agreed to engage in preliminary discussions.
That appeared to signal the end of negotiations but, following reports that the merger could be back on, Balfour Beatty has issued a further statement confirming it has rejected a revised Carillion offer.
The statement said, “The Board has lost confidence in the likely delivery of a successful transaction and has therefore concluded that the current proposal from Carillion is not in the best interests of Balfour Beatty shareholders.”