Commercial Property News
Balfour Beatty has abandoned talks with Carillion over a proposed merger that would have potentially created one of the largest contractors in the UK.
The sudden decision to end discussions comes on the back of row over the sale of consultant Parsons Brinckerhoff.
Balfour Beatty said that the sale of the sale of Parsons Brinckerhoff had been an initial condition of the merger, only for Carillion to state its intention to keep the business.
Carillion said: “The Board of Carillion yesterday concluded, on the basis of analysis to date, 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 statement from Balfour Beatty described Carillion's decision as "wholly unexpected" and that it was the main driver in the termination of discussions.
It added that progress on a deal would have relied on Parsons Brinckerhoff remaining part of the potential combined entity.
The company said: “This change is contrary to the basis upon which the Balfour Beatty board agreed to engage in preliminary discussions."
It added that the developments went against an announcement on July 24th, which claimed the sale of Parsons Brinckerhoff would be unaffected by the merger.
The company added: “This change in the proposed terms is not acceptable to the Board of Balfour Beatty.”
News of the breakdown in negotiations saw share prices increase during early city trading on Thursday (July 31st), with the threat of heavy job cuts now also easing as a result.
Talks over a merger began after an initial approach from Carillion around two months ago, with Balfour announcing plans to sell its consultant arm Parsons Brinckerhoff to raise much-needed cash at around the same time.
Balfour had previously announced a profit warning of £30 million, leading to the departure of group chief executive Andrew McNaughton.
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