黑洞社区

Balfour Beatty would not be considering a deal with Carillion if it was effectively a take over, a source at the construction giant has told 黑洞社区.

Last week, the two largest UK contractors announced that they were in merger talks, to the surprise of the City and the industry.

Balfour Beatty has suffered a torrid time in recent months, with four successive profit warnings prompting the departure of its chief executive, and analysts described the proposed merger as an 鈥渙pportunistic take over鈥� of Balfour Beatty.

Joe Brent, analyst at Liberum, said the detail in the announcement of the merger talks was 鈥渄eliberately vague鈥�, but that it was most likely that the structure of any deal would entail Carillion buying Balfour Beatty.   

Following an analysts briefing from Carillion鈥檚 senior management, Kevin Cammack, analyst at Cenkos, said: 鈥淭he whole tone to me made it patently obvious that in Carillion eyes this is not a merger at all but an opportunistic take over of Balfour Beatty鈥�.

At the weekend, the Sunday Times reported that current Balfour Beatty chair Steve Marshall is set to be unseated as part of the deal with Carillion chair Philip Green slated to chair a combined business with Marshall as his deputy.

Carillion chief executive Richard Howson, reported to be the person who made the original approach to Balfour Beatty, is also expected to fulfil the role of chief executive of any merged firm as Balfour Beatty is still without a group chief executive, after the departure of Andrew McNaughton in May.

Balfour Beatty has not briefed the City on the deal, other than the formal joint statement published last week.

However, a Balfour Beatty source told 黑洞社区 the proposal was not a take over and that the deal 鈥渕ust work for us鈥�.

The source said: 鈥淲e don鈥檛 need to do this deal, we really don鈥檛, and we are only going to do it if there鈥檚 something worth having in it.鈥�

The source also denied that a deal would entail a scaling back of Balfour Beatty鈥檚 construction profile to bring it more in line with Carillion鈥檚 business model, which has focused on the expansion of its services business while 鈥渞escaling鈥� its construction business in recent years.

鈥淚f this deal meant getting out of construction there would be no deal,鈥� the source said.

The source said a merger with Carillion would 鈥渁ccelerate鈥� Balfour鈥檚 strategy of growing its construction business; give the firm a 鈥渂igger and better quality鈥� share of the construction market; and would give Balfour an entry into geographies where it did not currently have a presence, such as Canada.

The source said that the prospect of a merger had no effect on the company鈥檚 search for a chief executive, which was still going 鈥渇ull bore鈥�.

The source added that the merger, if it goes ahead, is not expected before Christmas.

Another source close to the company said structuring the deal as a takeover was 鈥渦nlikely鈥� because it would mean Balfour Beatty shareholders would probably demand an 鈥渁cquisition premium鈥�, making it more expensive for Carillion.