Balfour Beatty has rebuffed another merger proposal from Carillion, saying the plan would involve reducing its revenue by up to two thirds.
Carillion is insistent that a merger would reduce the cost-base of the combined group by at least £175m per year by the end of 2016.
On Thursday it attempted to sweeten the deal for Balfour Beatty shareholders with the offer of an increased cash dividend of 8.5 pence per Balfour Beatty share.
Balfour rejected the proposals, publishing a list of its reasons against Carillion’s plan. The firm said the capitalised synergies of the group would be “materially lower” than the £1.5bn suggested by Carillion.
In a note to shareholders, Balfour also said Carillion’s proposed retention of the Parsons Brinckerhoff business would “exacerbate the scale of the challenge” at a time when the management team would be trying to downsize the UK construction business.
Balfour said the sale of Parsons Brinckerhoff was already at an advanced stage and the competitive nature of the process demonstrated “the attractiveness” of the asset in the current construction cycle.
In a reiteration of its forward plan in its recent interim results, Balfour said: “Balfour Beatty will be refocused as an Anglo-American construction and specialist services group where there is strong US market opportunity and UK margin recovery potential.
“The Group’s over-arching investments business is value creating and synergistic. Joint ventures in the Far East and the Middle East will be retained subject to them being value accretive.”