Following discussions with Balfour Beatty’s major shareholders, Carillion has announced that it has today put an improved merger proposal to Balfour Beatty which values the firm at £2,086 million.
In a statement, Carillion said it hopes that, on the basis of the improved terms, the Board of Balfour Beatty will now re-engage in discussions and extend the PUSU deadline which is currently 5:00pm this Thursday.
This is the deadline imposed by the Panel on Takeovers and Mergers for Carillion to announce a firm offer, or to announce that it does not intend to make a firm offer.
In order for discussions to continue and for mutual due diligence to be concluded, Balfour Beatty must now request that the Panel on Takeovers and Mergers extend the deadline.
Carillion said:
“The Board of Carillion continues to believe in the powerful strategic logic of a merger with Balfour Beatty and that, as a direct result of the merger, the cost-base of the combined group could be reduced by at least £175 million per annum by the end of 20162, that earnings would consequently be significantly enhanced from that year and that these cost savings would represent a capitalised value of over £1.5 billion before any re-rating.”.
Since its announcement on 14 August 2014, Carillion has continued discussions with Balfour Beatty’s major shareholders. Carillion said it believes that the revised proposal provides “a compelling case” for the Board of Balfour Beatty to request the Panel on Takeovers and Mergers to extend the PUSU deadline and to resume discussions with Carillion, particularly when seen in the light of Balfour Beatty’s proposal to continue on a standalone basis.
Philip Green, Chairman of Carillion said
“Given the scale of the prize for shareholders of both Balfour Beatty and Carillion from a merger of the two companies, the Board of Carillion remains committed to moving forward in a constructive and collaborative way with the Board and management of Balfour Beatty to create a world-class business and very significant value for the shareholders of both companies”.
The deadline imposed by the Panel on Takeovers and Mergers for Carillion to announce a firm offer, or to announce that it does not intend to make a firm offer, is currently 5:00pm this Thursday.
In order for discussions to continue and for mutual due diligence to be concluded, Balfour Beatty must now request that the Panel on Takeovers and Mergers extend the deadline.
From the time of full re-engagement by Balfour Beatty, Carillion expects to be in a position to announce a firm offer for Balfour Beatty within four weeks.
Carillion’s revised proposal includes three Balfour Beatty non-executive directors joining the Board, with the senior management team below board level to be drawn from both companies.
Carillion said it has repeated to Balfour Beatty that it is willing to allow it to continue with its Parsons Brinckerhoff auction process, and to enter into a contract for a sale of Parsons Brinckerhoff subject to shareholder approval. However, if the merger proceeds, Carillion would expect the disposal of Parsons Brinckerhoff not to be completed.
In the event that the merger goes ahead and Parsons Brinckerhoff is not sold, Carillion is willing to reimburse the remaining Parsons Brinckerhoff bidders’ reasonable costs (up to £10 million in aggregate).
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