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Balfour Beatty rejects Carillion merger as profits drop 53 per cent
Balfour Beatty has said it had "lost confidence" in merger talks with Carillion, as the British infrastructure company separately announced today that half-year profits have dropped by over 50 per cent compared to the same period last year.
The company is currently in an offer period which extends to 21 August 2014, and had been approached by construction services company Carillion with a £3bn merger proposal, but talks were called off at the end of last month.
The FTSE 250 company is currently in the process of selling planning and engineering subsidiary Parson Brinckerhoff but in a statement made public this morning, Balfour Beatty said that the Carillion merger risked “undermining the Parsons Brinckerhoff sales process…a key strategic objective of the group”.
Balfour Beatty’s half-year financial results have also been revealed today, with pre-tax profit for the period ending June 27 dropping 53 per cent to £22m from £45m at the same point last year as a result of engineering services contract write-downs in the UK. Revenue also dropped to £4.85bn, a 2 per cent drop from £4.96bn a year ago.
The Balfour Beatty board said:
While the Board is mindful of the synergies that might be achieved through a combination with Carillion, the Board has concluded that there are a number of significant risks many of which cannot be mitigated.The Board has lost confidence in the likely delivery of a successful transaction and has therefore concluded that the current proposal from Carillion is not in the best interests of Balfour Beatty shareholders.With the Parsons Brinckerhoff sale process proceeding in line with the Board's expectations, the Board is clear that its current plans to refocus and simplify the Group, including the sale of Parsons Brinckerhoff, remains the most attractive option.
Balfour Beatty's share price tanked in May after the company issued its fourth profit warning in two years.