Balfour Beatty rejects Carillion merger for the second time
Infrastructure firm Balfour Beatty has reaffirmed its rejection of a merger with Carillion. Balfour's board said it had considered the potential for synergies, risk of revenue and cost leakage and the impact of terminating the Parsons Brinckerhoff sales process.
However, it came to the conclusion that an independent strategy, all the benefits of which will accrue to its shareholders, would be preferable to a merger.
Balfour cited a recovering UK construction business, a strong US construction business in a growing market and the opportunity to deliver further efficiencies as reasons for maintaining the status quo. The FTSE 250 company argued there would be several challenges to a merger, which would not be in the best interests of shareholders.
Balfour said in a statement:
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.
This questions the applicability of historical benchmarks.
Yesterday, Carillion released a statement saying a merger between Carillion and Balfour Beatty could save as much as £175m a year. In a bid to win over shareholders, Carillion also proposed that Balfour's investors receive an additional cash dividend of 8.5 pence per Balfour Beatty share.
This would be in addition to the final 2014 dividend they would be entitled to receive as shareholders in the enlarged group.