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Balfour Beatty rejects Carillion’s improved offer

Balfour Beatty’s board has “unanimously” rejected Carillion’s latest offer for its share capital.

The improved proposal announced yesterday increased Carillion’s valuation of Balfour by £200M to £2.09bn, and would have given the latter’s shareholders a bigger share of the merged group.

But Balfour Beatty has snubbed the latest offer, saying it ”again fails to address two key concerns”. These are described as:

  1. “The considerable risks associated with the proposed business plan, including the strategy to significantly reduce the scale of the UK Construction business when it is poised to benefit from a recovery in the market; and
  2. “The continued intention to terminate the sale of Parsons Brinckerhoff at a point when it is reaching a successful conclusion.”

As a result, Balfour Beatty said it would not seek an extension to the “Put Up or Shut Up”  deadline of 5pm on 21 August 2014, which was set by the City of London’s Panel on Takeovers and Mergers. This effectively puts an end to further negotiations between the two firms. It leaves Carillion with the option of mounting a hostile takeover.

Balfour added: “The revised proposal represents only a small value change in the terms compared to the proposal from Carillion rejected on 11 August 2014. The Balfour Beatty will therefore continue to be focused on delivering its standalone strategy as set out on 11 August 2014.”

The firm said its key priorities are:

  • concluding the Parsons Brinckerhoff sales process, and returning up to £200M of capital to Balfour Beatty shareholders;
  • recruiting an “outstanding” group CEO;
  • restoring value to the UK construction business, and returning it to peer group margins.

It added: “The board will also remain open to strategic value creating opportunities across the group while it concentrates on the restoration of value to its shareholders. It will consider all such opportunities, and the risks associated with their execution, taking full account of the significant recovery potential within the Balfour Beatty business.”

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