Construction giant Balfour Beatty has rejected a third takeover bid from rival Carillion saying its position on the merger had remained 'unchanged' from earlier in the week.
Carillion attempted to sweeten its takeover offer for rival Balfour Beatty, arguing there is ‘powerful strategic logic’ in a merger. The company yesterday announced a 5% rise in pre-tax profits for the six months to the end of June to £67.5m, compared with £64.2m a year earlier.
According to Carillion, a merger would save both companies £1.5bn and reduce the cost base of the combined group by at least £175m a year by the end of 2016.
In a press release Carillion said it continued to believe there will be a financial benefit of a merger with Balfour Beatty and is therefore continuing to consider its position.
However, in a statement released this morning, Balfour Beatty rejected the new offer saying in a statement that: ‘The Board of Balfour Beatty has further considered the announcement from Carillion plc (‘Carillion’) dated 14 August 2014. The proposal remains unchanged to that rejected on 11 August 2014. The Board reaffirms its rejection of the proposal.’
In reaching its decision on the merger proposal, the Board said it had considered a range of issues including:
- the potential for synergies;
- cost and execution risks;
- a reduced exposure to recovery in UK construction;
- risk of revenue and cost leakage; and
- the impact of terminating the Parsons Brinckerhoff sales process.
Concluding, the statement said: ‘Accordingly, in light of these considerations as well as those outlined in the announcements by Balfour Beatty on 11 and 14 August 2014, the Balfour Beatty Board has again concluded that the proposal from Carillion is not in the best interests of Balfour Beatty shareholders.’
Balfour Beatty is currently working on the Crossrail project, while Carillion was given the £75m contract to expand Anfield’s stadium. Between the two companies they employ over 80,000 people.