Balfour dismisses Carillion's latest takeover approach
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Construction group Balfour Beatty has again rebuffed Carillion's takeover proposal, branding it "opportunistic" and accusing Carillion of wanting to reduce Balfour's UK construction revenues by up to two thirds.
Carillion on Thursday said it had talked to Balfour's shareholders about the potential benefits of a tie-up between the pair, saying it could save at least £175m a year by the end of 2016, enhancing earnings "significantly" from then.
Carillion also still wants Balfour to drop its proposed sale of US engineering consultancy Parsons Brinckerhoff, which was partly why Balfour rejected its initial takeover proposal.
But Balfour on Friday dismissed Carillion's latest moves, saying a radical streamlining of its building business would require a major cut in overheads that would reduce the savings flowing through to profits.
"Cost savings driven by shrinking the business should not be confused with synergies," Balfour said in a statement.
"These cost reductions will reduce the amount of the £175m that could enhance profitability."
It added that Carillion may struggle to manage such a big enlarged group and that the proposed shrinkage of the construction business could reduce exposure to a recovering sector.
Balfour said: "The board believes this is the right time to sell Parsons Brinckerhoff, but believes Carillion's approach for the entire group at this stage of the construction cycle is opportunistic."
It added: "The Balfour Beatty board has again concluded that the proposal from Carillion is not in the best interests of Balfour Beatty shareholders."
PW