15th Aug 2014 07:26
LONDON (Alliance News) - Balfour Beatty PLC Friday reaffirmed that it does not want to accept the merger proposal of fellow construction company Carillion PLC.
In a statement, Balfour Beatty said that it has considered a number of factors, including potential for synergies, cost and execution risks, and a reduced exposure to recovery in UK construction, ahead of reaching its decision.
The company also cited the sale of its US project management business, Parsons Brinckerhoff, which has become a serious bone of contention for the two companies, saying that terminating the sale process would risk damaging a "significant part of the value" of the company.
Balfour Beatty raised concerns about the risks of revenue and cost leakage in the case of a merger going through.
"The proposal remains unchanged to that rejected on August 11, 2014. The board reaffirms its rejection of the proposal," Balfour Beatty said in a statement.
The news comes after Carillion Thursday said it had held meetings with a number of major Balfour Beatty since the start of the week. Prior to that, Carillion had already made two unsuccessful offers to Balfour Beatty's board.
The initial proposal for a merger of Balfour Beatty and Carillion implied an ownership split which would have been 51% of the combined entity to Balfour Beatty shareholders and 49% to Carillion shareholders.
Following successive negotiations with Carillion over several weeks Balfour Beatty said it agreed to engage with Carillion at the end of June on the basis of an all-share combination with 56.5% undiluted ordinary equity to Balfour Beatty shareholders and 43.5% to Carillion shareholders.
At the time the two companies confirmed publicly that they were in talks to create a construction services powerhouse worth around GBP3 billion, and both Carillion and Balfour Beatty said the sale of Parsons Brinckerhoff would proceed as expected.
By Samuel Agini; [email protected]; @samuelagini
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