Partly Cloudy

Partly Cloudy

max temp: 15°C

min temp: 7°C


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 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

Needham Road in Stowmarket where the crash took place

An 81-year-old cyclist who sustained serious injuries following a collision in Stowmarket last week has died.

Glen Chisholm with baby Clinton 18 years ago.

Eighteen years ago the Ipswich Hospital Neonatal Unit saved the life of premature baby Clinton Chisholm.

The new bridge over Bramford Road takes shape.

It is 30 years since the face of Ipswich was changed completely with the opening of the final section of the town’s southern bypass.

Ipswich Basketball Club prepare for the new season at Copleston Sports Centre.

Copleston Sports Centre and Ipswich Basketball Club plea for investors to make long-awaited dream a reality

Michael Scott, chief executive of Norfolk and Suffolk NHS Foundation Trust . Photo: Steve Adams

A lack of beds and increased demand led to a four-fold increase in the cost of sending people with mental health problems outside of Norfolk and Suffolk in 2014/15.

Poundworld opens in Ipswich

The fourth bargain-basement shop in Ipswich town centre opened this morning.

The area in Clarkson Street where two gangs fought on September 23

Four people were arrested in drug raids carried out at six premises in the Wilberforce Street and Clarkson Street areas of Ipswich yesterday.

The East Anglian Air Ambulance is in attendance.

A woman has suffered a “potentially life-changing” head injury during a crash in Beccles.

South East Suffolk Magistrates' Court

Two drivers are paying the price after being caught travelling at more than 100mph on Suffolk’s roads.

A cyclist and a car collided on the St Augustine's roundabout in Ipswich.

A female cyclist has been taken to hospital after colliding with a car in Ipswich.

Most read

Most commented

Topic pages