Balfour Beatty investors keep Carillion merger hopes alive after talks collapse
Balfour Beatty investors said the prospect of a tie-up with construction industry rival Carillion is not yet dead in the water, after talks between the two sides collapsed.
Carillion is barred from reheating the deal for six months under takeover rules, after Balfour rejected its third offer and refused to extend today’s deadline for a firm offer, saying it had consulted with investors.
Tie up? Two of Balfour's top five investors said the deal could be revived once the cooling-off period imposed by the Takeover Panel is over
Balfour’s chief objections were Carillion’s demand that it abandon the sale of US business Parsons Brinckerhoff and a plan to scale back the UK construction business.
But two of Balfour’s top five investors, who declined to be named, said the deal could be revived once the cooling-off period imposed by the Takeover Panel is finished.
One said the target firm’s objections to Carillion’s strategy for the merged business could be surmounted by a better price. ‘Ultimately Carillion didn’t make an adequate offer,’ said the investor, adding that shareholders were not offered a ‘control premium’, meaning a price for what would effectively be a takeover.
He pointed out that Carillion’s latest offer, valuing Balfour at around £2.1billion, was a mere £55million improvement on the previous proposition. The investor added that Balfour is due for a revaluation of its investments in public-private partnerships, which analysts have said could increase the value of its portfolio from £770million to £1billion.
Another top five shareholder said: ‘If after Balfour’s possible sale of Parsons Brinckerhoff Carillion then look to re-engage, it’s important that Balfour Beatty respond objectively.’
Carillion can lodge a new bid for Balfour within the six-month period, but only if a rival bidder enters the fray or Balfour voluntarily comes to the negotiating table.
But positive noises from investors could convince Carillion to spend the intervening time putting together a new proposal.
Shares in Carillion fell 6.7p to 330p, while Balfour slumped even further, losing 17.1p to 238.9p.
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