UK construction giants break off discussions over the sale of consultant Parsons Brinckerhoff
British construction giant Balfour Beatty has called off merger talks with its rival Carillion, scuppering plans for a UK ‘super-contractor’.
The abrupt decision to abandon merger discussions came in the wake of a dispute over the sale of consultant Parsons Brinckerhoff, a subsidiary of Balfour Beatty.
In a statement, the contractor said that it had entered into talks on the basis that it would first be able to proceed with the sale of Parsons Brinckerhoff, but Carillion had wanted to keep the global consultancy business as part of the merger deal.
“The termination of discussions follows Carillion’s wholly unexpected decision to only progress the possible merger in the event that Parsons Brinckerhoff remained part of the potential combined entity,” the UK based construction giant said.
“This change is contrary to the basis upon which the Balfour Beatty board agreed to engage in preliminary discussions.
“It is also contrary to the joint announcement released on 24 July, which confirmed that the sale of Parsons Brinckerhoff would be unaffected by the merger discussions and also a presentation to Balfour Beatty’s Board by Carillion on 28 July,” the statement added.
“This change in the proposed terms is not acceptable to the Board of Balfour Beatty.”
The cancellation will come as a relief to employees at both contractors, with rumours of heavy job cuts swirling around the merger discussions, the London- based Construction Enquirer said.
Steve Marshall, chairman of Balfour Beatty Group, told www.building.co.uk that Carillion was not in a position to make a hostile takeover bid for the construction giant.
Marshall, who has taken over the role of executive chairman while the firm seeks a new chief executive, also revealed that he is set to upgrade the valuation of the firm’s portfolio of investments to try and sure up its share price when its interim results are announced in August.
Despite Balfour’s cancellation of talks, construction analysts have warned that the contractor ‘had been left in a weak position’.
Carillion had first approached Balfour Beatty about the merger about two months ago, after Balfour had announced its latest $50 million profit warning, which led to Andrew McNaughton, former group chief executive, to exit.
At the same time, Balfour Beatty announced that it planned to sell its consultant arm, Parsons Brinckerhoff to once again focus on the UK and US markets.
According to Construction Enquirer, the latest announcements indicate that Balfour Beatty has found a buyer and is in advanced talks, a move that would bring in a much-needed cash injection to the contractor.