Overcast

Overcast

max temp: 22°C

min temp: 15°C

Search

The pigs have arrived. See the latest

Pigs Gone Wild

news here.

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.”

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 Ipswich Star 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 Ipswich Star 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 Ipswich Star 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

Programme Name: Robot Wars - TX: n/a - Episode: n/a (No. n/a) - Picture Shows: The House Robots Dead Metal, Sir Killalot, Matilda, Shunt - (C) Mentorn Media Scotland - Photographer: Alan Peebles

“For too long, the schedules have cried out for a show in which dedicated amateurs, toiling day and night, handcraft sophisticated automatons built on the delicate interplay of hand-wired servo motors with custom-built circuit boards and fingertip motion control, just to see them get smashed to pieces by a dustbin carrying a massive hammer.

Flower left at Bramford Recreation Ground on Saturday to mark the third anniversary of toddler Ryan Ward's death.

Travellers have arrived at a playing field in Ipswich - almost three years to the day since a toddler was killed in a collision with a van at the same site.

Abellio Greater Anglia

A person has been pronounced dead after being struck by a train near Needham Market station.

A company in Gt. Blakenham has been making insoles for years but everything has suddenly taken off since Usain Bolt started using their products. Pictured is director Bente Smith-Rewse.

He is one of the most recognisable, decorated and influential sportsmen on the planet – but Usain Bolt is now endorsing a product made in the heart of Suffolk.

It's hot up there!

You know it’s hot when your thighs stick together. For men out there, it’s more of a woman thing, writes Lynne Mortimer.

The snake captured by residents in St John's Road, Ipswich.

Brave neighbours came to the aid of a father and his three young daughters who were left stunned when they discovered an exotic-looking snake coiled in their back garden.

England's Harry Martin in 2014.

The greatest sporting spectacle on the planet is almost upon us once again.

Sandcastle building at Southwold

What are we doing today? The summer holidays are here and to help parents in Suffolk we are offering a guide to 12 days out on the Suffolk coast that won’t cost a penny.

Firefighters from Suffolk Fire and Rescue Service attended.

Firefighters helped free a baby locked in a car in Ipswich today.

Roadworks currently ongoing at Majors Corner, Ipswich.

Work to upgrade the gas mains in Ipswich’s Woodbridge Road East has been postponed until August 1 following a request from Suffolk County Council.

Most read

Most commented

HOT JOBS

Show Job Lists

Topic pages

Streetlife

Newsletter Sign Up

Great British Life

Great British Life
MyDate24 MyPhotos24