Balfour Beatty and Carillion, two of Britain's largest construction firms, have confirmed that they are discussing a possible merger in a deal which, if it goes ahead, would create a business worth around £3 billion.
Carillion is currently valued at £1.45bn, while Balfour Beatty has a market capitalisation of £1.6bn.
A statement issued by Balfour Beatty this evening said:
“In view of recent media speculation the Boards of Carillion and Balfour Beatty can confirm that, following an approach from Carillion to Balfour Beatty, they are engaged in preliminary discussions in relation to a possible merger of Carillion and Balfour Beatty.”
“The Boards of Carillion and Balfour Beatty believe that the merger of the two groups has the potential to create a market leading services, investments, and construction business of considerable depth and scale. Work is now underway to develop a strategy and outline business plan for a combined entity, underpinned by the evaluation of achievable synergies, future financing arrangements and a number of other essential supporting workstreams. In evaluating the merits of the merger, the two boards will, inter alia, wish to be satisfied that such a merger would lead to very significant value creation for the benefit of both sets of shareholders.”
The two parties have agreed that Balfour Beatty’s publicly announced sale process for Parsons Brinckerhoff, which is already underway, will proceed unaffected by the announcement, subject to achieving acceptable value and terms.
The Boards of Carillion and Balfour Beatty said they would only proceed with a merger if both Carillion and Balfour Beatty were to conclude due diligence to their satisfaction and the Boards of Carillion and Balfour Beatty were to recommend it to their shareholders. No final decision has been reached regarding the structure of any merger.
Carillion and Balfour Beatty are required, by not later than 5.00 p.m. on 21 August 2014 to either announce a firm intention to undertake a transaction or to announce that they do not intend to undertake a transaction.
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