Balfour Beatty calls off takeover talks but Carillion could go hostile
Takeover talks between British construction company Balfour Beatty and infrastructure giant Carillion ended abruptly yesterday, just days after the £3bn bid began.
Balfour backed out of the deal after Carillion demanded the company call a halt to the sale of Parsons Brinckerhoff (PB), a US engineering and design business it bought in 2009. The proposed sale follows a difficult 18 months for Balfour, after chief executive Andrew McNaughton quit with immediate effect in May. His departure came amid a profit warning, which saw the construction company take a £35m hit when trading in its mechanical and electrical engineering division deteriorated.
In a statement yesterday, Carillion admitted it was “surprised” by Balfour’s unequivocal termination of the talks, adding: “The board of Carillion concluded that for the combination to satisfy Carillion’s requirements it would be essential to retain the stability and dependability of Parsons Brinckerhoff’s earnings.”
A source close to the talks added that the retention of PB is a “line in the sand” for Carillion and that the deal “wouldn’t stack up” without it after the company looked at Balfour’s books.
Analysts yesterday raised the possibility of a hostile takeover bid by Carillion, as the company remains convinced that a takeover would be profitable for both parties and is keen to do a deal.