Pressure grows on Balfour Beatty to resume talks with Carillion over £3bn merger
Monday 18 August 2014
A major shareholder has stepped up the pressure on builder Balfour Beatty to reopen talks over a £3 billion merger with rival Carillion today as the clock ticked down towards a Takeover Panel deadline to agree a deal.
The friendly agreed merger became acrimonious three weeks ago after Carillion’s U-turn over the fate of highly-profitable US business Parsons Brinckerhoff, which Balfour is selling but Carillion now wants to keep.
Balfour, without a chief executive and hit by a clutch of profit warnings, ended talks as a result. But a shareholder in both firms, Standard Life, has now gone public, urging Balfour back to the table three days ahead of Thursday’s “put up or shut up” deadline.
David Cummings, head of UK equities at Standard Life, told BBC Radio: “We do believe there are significant synergy benefits from a deal that Carillion can take a lot of cost out and deliver that to the benefit of both shareholders. If they can agree terms, there is a case for a merger.
“Having said that, Carillion has approached Balfour Beatty at a low point in the company’s fortunes with no chief executive and a depressed market valuation. There’s scope for Carillion to modestly improve its terms. If they do that, Balfour Beatty should reopen merger talks unless they have got a credible alternative.
“At the moment all we have got is a combination of patience and the triumph of hope over experience.”
Standard Life owns 2.4 per cent of Carillion and 3.5 per cent of Balfour Beatty. The current deal involves Balfour’s shareholders holding 56.5 per cent of the new company with 43.5 per cent heading to Carillion investors.
Any improvement in the terms is almost certain to see a bigger share of the business going to Balfour investors rather than any cash incentive.
Carillion said it can deliver at least £175 million in savings through the combination, although Balfour has cast doubt on the ability of its management team to drive through cost savings in a much bigger firm with 80,000 staff.
Carillion was today also forced to clarify chairman Philip Green’s weekend comments that its plans for an overall £1.5 billion in savings had been “audited”. The firm said the savings had “not been ‘audited’ in the technical sense” but verified by an independent accounting firm.
- 1 Nigel Farage: Me vs Russell Brand on Question Time – he's got the chest hair but where are his ideas?
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Weather bomb in pictures: Storms cuts power for tens of thousands – and snow is on the way
Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
Russell Brand was rendered speechless on Question Time by this man
Fury at Airbus after it hints the super-jumbo may be mothballed
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...