Balfour Beatty this morning rejected a second merger approach from Carillion, at the same time as announcing a fall in profits for the first half of the year.
Weekend press reports suggested that Balfour Beatty and Carillion might patch together a new deal following Balfour’s sudden breaking off of talks last month after Carillion insisted on keeping Parsons Brinckerhoff as part of the merged group. Balfour Beatty however insisted that the sale for a hoped for £650M was to proceed, killing the deal that would have created a merged group with a £3Bn stock market capitalisation and around 80,000 engineering staff.
This morning however Balfour Beatty issued a statement stating a number of reasons for rejecting the revised offer, including several risks that ‘cannot be mitigated’, including undermining the Parson Brinckerhoff sales process. The board said there was a risk that a failed sale process would ‘materially impact the motivation and retention of Parsons Brinckerhoff management and employees’ and damage its competitive position in a rapidly consolidating professional services market.
Balfour Beatty’s half year results are in line with recent trading updates, with underlying profit of £22M, down from £47M for the same period last year because of problem contracts in the mechanical and electrical services division. Professional services performance was in line with last year and Support Services profits had increased.
Infrastructure investments performed well with disposals significantly above directors’ valuations. The order book was described as stable at £13Bn, down 1% from a year ago at constant currency.