Carillion fails in Balfour takeover bid

Shares in construction firm Balfour Beatty opened over five per cent down after the company rejected a third takeover bid from rival Carillion.

The proposal, valued at over £2 billion, would have seen Carillion pay a 36 per cent premium to the recent average price of Balfour shares. However, this has been knocked by the British firm which stated that Carillion had failed to address the two concerns it had when it came to the idea of selling up.

Balfour is looking to sells its US operations which Carillion has been reluctant to purchase and it is also unconvinced that Carillion can deliver the costs savings it has suggested. The latest offer, announced on Tuesday (August 19th), was an improvement on Carillion's previous bid and would give Balfour shareholders 58.268 per cent control of the new organisation, compared to the previous offer of 56.5 per cent.

Announcing the deal on Tuesday, Carillion explained that it "continues to believe in the powerful strategic logic of a merger with Balfour Beatty". While the offer does represent a huge financial boost for Balfour, the main stumbling block is the future of the company's US business, Parson Brinckerhoff.

Balfour is keen to move on the engineering and design company but Carillion stated that any deal would halt its sale, despite Balfour being confident of generating £200 million to its shareholders once sold. This disagreement has meant Carillion has seen a third bid knocked back putting the potential takeover in doubt.

Prior to Balfour's rejection, Niall Dineen, portfolio manager at AGF International Advisors and a shareholder in both Balfour and Carillion, said: "The Carillion argument regarding synergies seems sensible, the Carillion idea of keeping the Parsons Brinckerhoff business seems sensible and the improvement in the offer should be enough to get Balfour Beatty to engage with them."

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