Balfour Beatty share price slides 7% after it rejects third Carillion offer

It's third time unlucky for Carillion with its sweetened £2bn offer, but Balfour Beatty's shareholders are getting restless as time runs out.

by Rachel Savage

It takes two to tango and Balfour Beatty is steadfastly refusing to dance with Carillion, turning down a third merger offer from its rival that valued it at more than £2bn. With time for a deal fast running out, investors have opted to show their disapproval with a classic: the share sell-off.

The latest terms would have given Balfour’s shareholders a 58.3% share of the merged company, a step up from the previous offer of 56.5%. Carillion also put a cash dividend of 8.5p per Balfour share on the table, bringing the deal’s total value to £2.09bn.

That was more than 15% above the previous £1.89bn offer and a 36% premium on its target’s typical share price before the offer was first leaked last month.

Even though it hasn’t had a chief executive since it issued a profit warning back in May, Balfour board was still determined to see off the deal. In a statement to the stock exchange it said it’s ‘two key concerns’ still hadn’t been addressed: Carillion’s plans to stop the sale of its US arm Parsons Brinckerhoff and shrink its UK construction business, ‘when it is poised to benefit from a recovery in the market’.

It also hasn’t asked for an extension to the ‘put up and shut up’ deadline of 5pm on Thursday, by which time Carillion has to make a formal offer and then, if rejected, walk away for six months.

Unless Carillion comes up with something drastic or Balfour’s shareholders go for a full-on revolt, it looks like the end of the line for the deal for now. Investors weren’t impressed though: Balfour’s shares plunged as much as 7% this morning, having risen almost 12% since former boss Andrew McNaughton was sent on his way in May. Its spurned suitor, meanwhile, was down 2.7%.

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