Balfour Beatty’s rejection this morning of Carillion’s third offer has prompted Carillion to give up and walk away.
Balfour Beatty said that unless Carillion accepted the sale of its US engineering subsidiary Parsons Brinckerhoff, then no deal could be agreed. Balfour’s board was also against Carillion’s proposed business plan, which envisaged a drastic reduction in UK construction activity.
In a statement this afternoon Carillion said: “The board of Balfour Beatty has not agreed to Carillion's proposal or to request an extension to the Put Up or Shut Up deadline which expires at 5pm tomorrow, 21 August 2014. Carillion therefore today announces that it is no longer pursuing such a merger.”
However, Carillion said that it still reserves the right to make another offer for Balfour Beatty, as allowed by the City Code on Takeovers & Mergers.
Carillion’s third and final offer was to hand Balfour Beatty shareholders a 58.268% share of the combined company.
The offer valued Balfour Beatty at £2,086 million. The two parties previously agreed an outline deal valuing it at £1,886 million, but that was before Carillion pulled out the surprise announcement that the deal only made sense if it could retain the revenues generated by Parsons Brinckerhoff.
Although the proposed deal has always technically been a merger, and has been presented as such, it was effectively a takeover, with all the top jobs going to Carillion executives. Philip Green would have remained chairman, Richard Howson CEO and Richard Adam CFO.
That Balfour Beatty’s board ever agreed to a deal in the first place indicates a willingness to surrender to takeover under the right terms.
Therefore this is not expected to be the end of the story.