Clock ticking as Carillion mulls Balfour Beatty options to sweeten £3bn mega-merger deal
The saga of a potential £3bn mega-merger between construction giants Carillion and Balfour Beatty has entered its endgame, with Carillion considering its options to entice its rival as the clock ticks down on the chances of a deal.
Carillion has until this Thursday to make another approach to its reluctant rival, after which it will be unable to make another offer for six months under takeover rules.
Carillion’s management is believed to be considering possible options to sweeten a potential deal in a last-gasp effort to convince Balfour Beatty, a development first reported in the Sunday Times.
Last Monday, a second bid from Carillion was rejected by Balfour Beatty, although Carillion is believed to have had meetings with a number of its rival’s major shareholders, with Balfour investors so far having been offered 56.5 per cent of the potential combined entity.
Carillion also again set out its case for the benefits of a deal and potential cost synergies, including a £175m reduction in the cost base of a combined group, which it estimates would add value of £1.5bn.
However, last Friday, Balfour Beatty continued its criticism of Carillion’s proposals, which Balfour thinks would cut revenues from its UK construction business by two-thirds and lead to it missing out on gains in the sector from the UK recovery. It has also raised doubts on benefits from cost savings, which Balfour considers would be “materially lower” than Carillion’s £1.5bn figure.