Engineering news
Balfour Beatty has disclosed that it had spurned a fresh merger bid from rival Carillion as it reported a slump in half-year profit.
Balfour revealed that executive chairman Steve Marshall had met Carillion chairman Philip Green for talks a week ago following the rejection of an earlier proposal.
However, the potential £3 billion tie-up continued to founder on Carillion's wish to cancel Balfour's planned £200 million sale of its US business Parsons Brinckerhoff.
Balfour insisted that the sale was a "key strategic objective" and concluded that the merger was not in the best interest of shareholders, despite Carillion's revised offer to pay for bidder costs and allow Balfour shareholders to receive a 2014 dividend.
Marshall said: "Those adjustments were not significant in the context of the overall transaction and didn't mitigate the concerns that the board had - but we thought very hard before coming to our conclusion."
Balfour said its current plan to refocus and simplify the group "remains the most attractive option", although it would still weigh up "strategic value creating opportunities across the group". The deadline for the offer expires on 21 August.
In response, Carillion said: "The board of Carillion will give further consideration to its position and will make a further announcement in due course. In the meantime, there can be no certainty that any offer will be made by Carillion or as to the terms on which any such offer might be made."
Meanwhile, Balfour brought forward interim results for the half-year to 27 June, which showed underlying pre-tax profit falling by 53% to £22 million.
Marshall admitted the first half had been "disappointing".
However, Balfour said it had seen an improvement in the quality of new orders, with joint venture awards such as a £160 million Sellafield nuclear facility contract and a £184 million "smart motorway" upgrade for the M60 and M62.
Margins on new bids were improving but would "take time to feed through into profitability", the company said.
Balfour added that, as previously warned, its major projects saw further cost increases of £10 million and delays during the first half. Its Cheadle-based engineering services business saw an "extremely challenging six months".
The total size of the company order book, combined with orders awarded but not yet contracted, was up 26% year-on-year, it said. However, these long-term projects would not benefit financial performance until 2016.