News Column

Statement by the Board of Balfour Beatty plc

August 18, 2014



ENP Newswire - 18 August 2014

Release date- 15082014 - The Board of Balfour Beatty notes the announcement made by Carillion plc this morning.

The statement from Carillion elaborates on the previous proposal which was rejected by the Board of Balfour Beatty, as announced on 11 August 2014, as not in shareholders' best interests. Balfour Beatty will make a further more detailed announcement in due course.

Today's announcement from Carillion does not address the significant risks set out in Balfour Beatty's announcement on 11 August. In particular:

To benchmark a series of theoretical cost reduction opportunities, represent them all as synergies, and further, to represent them as incremental value creation directly arising from the merger proposal is incorrect.

Several key business plan assumptions suggest an analysis based on the integration of businesses smaller than Carillion's, rather than one that is substantially larger. In particular, the substantial rescaling - possibly by up to two thirds - in the revenue of Balfour Beatty'sUK construction business would eliminate future earnings recovery potential. It would also incur cash outflows of many hundreds of millions of pounds of restructuring costs and working capital.

As a result, the Board of Balfour Beatty has serious reservations as to the achievability of the stated synergy number and believes that it creates unacceptable operational and financial risks. In contrast, Balfour Beatty has clear plans for developing rather than partially eliminating the UK Construction Services business, including achieving future cost savings where 100% of the benefits achieved would accrue to Balfour Beatty shareholders.

Carillion continue to require Parsons Brinckerhoff to remain part of the potential combined business, without providing any strategic or value related logic for its retention, other than for financial presentation purposes. Balfour Beatty has been clear that Parsons Brinckerhoff has not provided synergistic benefits for the Group over five years of ownership, and this has not been disputed by Carillion.

Their proposed approach would result in the likely termination of the Parsons Brinckerhoff sales process. This risks damage to that business, as well as eroding its competitive position, and potentially resulting in a loss of value to our shareholders.

The principal objective of the Board of Balfour Beatty is to restore value to its shareholders. The Board is confident that pursuing its strong independent strategy based around a recovering UK business, growing US market and significant investments business is more attractive than a merger on the terms proposed by Carillion with its associated execution risks and potential value loss from a terminated Parsons Brinckerhoff sale. As already indicated, the Board remains open to strategic value creating opportunities across the Group.

There can be no certainty that an offer will be made by Carillion for Balfour Beatty nor as to the terms of any such offer.

This announcement is not being made with the consent of Carillion.

Contact:

Balfour Beatty

Anoop Kang

Investor Relations

Tel: +44 (0) 20 7216 6913

Email: anoop.kang@balfourbeatty.com

Patrick Kerr

Director

Corporate Communications

Tel: +44 (0) 20 7963 4258

Email: patrick.kerr@balfourbeatty.com

Directors' Responsibility Statement

The Directors of Balfour Beatty accept responsibility for the information contained in this document. To the best of the knowledge and belief of the Directors, who have taken all reasonable care to ensure such is the case, the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information.

This announcement is for information purposes only and does not constitute an offer to sell or an invitation to purchase any securities or the solicitation of an offer to buy any securities, pursuant to the offer or otherwise.

Disclosure requirements of the Code

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any securities exchange offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any securities exchange offeror is first identified.

An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th business day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th business day following the announcement in which any securities exchange offeror is first identified.

Relevant persons who deal in the relevant securities of the offeree company or of a securities exchange offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any securities exchange offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any securities exchange offeror.

A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any securities exchange offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the business day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of an offeree company or a securities exchange offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them.

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified.

You should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129 if you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure.

Publication on website

A copy of this announcement will be made available subject to certain restrictions relating to persons resident in restricted jurisdictions on Balfour Beatty's website at www.balfourbeatty.com by no later than 12 noon (London time) on 15 August 2014.

Further information

Goldman Sachs International, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting as financial advisor to Balfour Beatty and no one else in connection with the matters referred to in this announcement.

In connection with such matters Goldman Sachs International, its affiliates and its and their respective directors, officers, employees and agents will not regard any other person as their client, nor will they be responsible to anyone other than Balfour Beatty for providing the protections afforded to clients of Goldman Sachs International, or for giving advice in connection with the contents of this announcement or any other matter referred to herein.

Merrill Lynch International ('BofA Merrill Lynch'), a subsidiary of Bank of America Corporation, is acting exclusively for Balfour Beatty in connection with the matters referred to in this announcement and for no one else and will not be responsible to anyone other than Balfour Beatty for providing the protections afforded to its clients or for providing advice in relation to the contents of this announcement or any other matter referred to herein.


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Source: ENP Newswire


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