Balfour Beatty share price: Carillion sweetens takeover offer

Carillion (LON:CLLN) has announced that it offered Balfour Beatty’s (LON:BBY) shareholders an additional cash dividend of 8.5 pence per share, in its attempt to push through a merger.

The news comes as Carillion today released its half-year results, revealing a five percent year-on-year rise in pre-tax profit to £67.5 million.
As of 11:56 BST, Balfour Beatty’s shares are currently trading about one percent up at 238.90p, while Carillion’s share price has climbed 6.48 percent to 340.75p.

Additional dividend

Carillion revealed in a statement today that the company had offered Balfour Beatty shareholders a further dividend of 8.5 pence per share in addition to the final 2014 dividend they would be entitled to receive as shareholders in the enlarged group.
A potential tie-up would allow both companies to reduce the cost base of the combined group by at least £175 million a year by the end of 2016. The cost savings would represent a capitalised value of over £1.5 billion.

The proposal was made after Carillion held meetings with Balfour Beatty’s major shareholders, following the rejection of the previous offers.
On Monday, Balfour Beatty declined a second merger offer from Carillion Plc, saying that the deal could create significant risks for shareholders, mainly related to the US design consultancy Parsons Brinckerhoff sales process. ()

In a statement today, Balfour Beatty commented that the new proposal did not address the “significant risks” set out in its previous announcement earlier this week.

“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,“ Balfour Beatty commented.

Under UK takeover panel rules Carillion has until the 21 August to make a final offer.