Having received revised merger terms from Carillion (LSE: CLLN) yesterday, management at Balfour Beatty (LSE: BBY) wasted no time in consulting with its major shareholders and have rejected the takeover proposal for the third time. Balfour’s board will therefore not be seeking an extension to Thursday’s 5pm “Put Up Or Shut Up” deadline.
Third time unlucky
This morning’s statement was unequivocal in stating that Carillion’s terms have once more failed to address two primary concerns that Balfour Beatty’s management has consistently raised, these being:
“1. The considerable risks associated with the proposed business plan, including the strategy to significantly reduce the scale of the UK Construction business when it is poised to benefit from a recovery in the market; and
“2. The continued intention to terminate the sale of Parsons Brinckerhoff at a point when it is reaching a successful conclusion.”
In summary: the latter point regards Balfour’s US business, which it is determined to sell, while Carillion would look to downgrade the merged company’s operations in the UK — the result being not dissimilar to pushing two opposable magnets against each other, then.
While yesterday’s proposal from Carillion represented more than a 35% premium to the recent average of Balfour’s share price, today’s rebuttal noted that the latest terms saw only a small increase in value from the second offer, amounting to around £55m.
Balfour Beatty’s shares fell by 7.5% in early trade this morning on the news, with Carillion’s declining by almost 3%.
