News Column

Carillion and Balfour talks encouraged

August 19, 2014

By Rupert Steiner, Daily Mail, London

Aug. 19--A key shareholder in Carillion has urged Balfour Beatty to restart merger talks ahead of Thursday's bid deadline.

The two construction firms have been holding on-off talks in what could create Britain's biggest construction firm with a combined pounds sterling 3bn market value.

However, Balfour Beatty rejected a second approach last week calling the proposal 'opportunistic'.

It had cast doubt on its prospective partner's annual cost-saving estimates, saying the method used to reach a figure of pounds sterling 175m was flawed. In an embarrassing blunder Carillion chairman Philip Green was forced to issue a formal stock market statement yesterday correcting an assurance made over the weekend that cost savings 'synergies' of pounds sterling 1.5bn from the deal had been independently audited.

He had said: 'Our synergy numbers have been audited, and at pounds sterling 1.5bn it is virtually the same as the current market value of either company.'

But what he meant, spelt out in yesterday's statement, was: 'Carillion's previous statement that the cost savings it has identified "would represent a capitalised value of over pounds sterling 1.5bn" has not been audited or reported on by an independent accounting firm.' Separately David Cummings, the head of equities at investor Standard Life, which holds stakes in both firms, took the unusual step of speaking out publicly in favour of merger talks restarting.

He said: 'If they can agree terms, there's a case for a merger. There's scope for Carillion to modestly improve its terms. If they do that, Balfour Beatty should reopen merger talks unless they have got a credible alternative.'

Carillion and its advisers are thought to be considering whether to offer Balfour's investors more of the combined group than the 56.5pc initially suggested. Another option could be further increasing the cash dividend element of the deal, on top of the 8.5p additional payout already being offered.


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Source: Daily Mail (London, England)

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