19th Aug 2014 14:51
LONDON (Alliance News) - Carillion PLC Tuesday sweetened its takeover approach for Balfour Beatty, offering an even bigger stake for Balfour shareholders, but it maintained that Balfour's proposed sale of its Parsons Brinckerhoff business won't be completed if a takeover deal is agreed.
Carillion is running out of time to make a formal offer, and urged Balfour Beatty to engage in takeover talks and to request an extension from the UK takeover panel for the time it has allowed for a formal bid to be made.
The sweetened deal comes just a day after Standard Life Group PLC, a major shareholder in both companies, called for pair to get back round the negotiating table and urged Carillion to sweeten its offer. Carillion had been talking to Balfour Beatty shareholders about what it would need to do to get backing for a deal.
Under Carillion's new offer, which values Balfour Beatty at GBP2.09 billion, Balfour shareholders would get a 58.268% stake in the merged business, and would also get the 8.5 pence per Balfour share cash dividend, worth GBP59 million, that Carillion had previously proposed. Carillion said Balfour Beatty had previously agreed to a 56.5% stake for its shareholder. Carillion's initial approach had envisaged Balfour Beatty shareholders taking a 51% stake.
In a separate statement Tuesday, Balfour Beatty said it was considering Carillion's latest announcement and would make a further announcement in due course.
The main sticking point in negotiations has been Balfour's refusal to consider halting the planned sale of its US project management business, Parsons Brinckerhoff. It has said the sale process is at a late stage and is non-negotiable.
Carillion hasn't changed its own position on the matter. It said it has repeated to Balfour that it is willing to allow it to continue with its Parsons Brinckerhoff auction process, and to enter into a contract for a sale of Parsons Brinckerhoff subject to shareholder approval, but if a merger between Carillion and Balfour proceeds, then it would expect the sale of the business would not go through.
It said it is willing to reimburse the remaining Parsons Brinckerhoff bidders reasonable costs for up to GBP10 million in total from the date that discussions with Balfour Beatty resume, if the takeover goes ahead and the business is not sold.
Carillion has until after market close this Thursday in order to either announce a firm offer or walk away. Therefore, for discussions to continue Balfour must request an extension.
The company said that if it were to re-engage with Balfour Beatty, it would expect to be in a position to announce a firm offer for Balfour Beatty within four weeks.
Shares in Carillion were trading down 0.5% at 336.00 pence Tuesday afternoon. Shares in Balfour Beatty were trading up 3.1% at 255.70 pence.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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