Balfour Beatty has terminated talks with rival with Carillion over a potential merger after just a week, following a dispute over Parsons Brinkerhoff.
Last week in a note to shareholders, Carillion said the two firms were entering into discussions to pull together a strategy and outline a merger.
And both companies had agreed that Balfour Beatty’s sale of subsidiary Parsons Brinckerhoff would go ahead, regardless of the talks.
Now, however, Balfour Beatty has announced it has halted discussions “with immediate effect” after Carillion made a dramatic U-turn in terms of Parsons Brinckerhoff.
In a market note the firm said: “The termination of discussions follows Carillion’s wholly unexpected decision to only progress the possible merger in the event that Parsons Brinckerhoff remained part of the potential combined entity.
“This change is contrary to the basis upon which the Balfour Beatty Board agreed to engage in preliminary discussions.
“It is also contrary to the joint announcement released on July 24 2014 which confirmed that the sale of Parsons Brinckerhoff would be unaffected by the merger discussions and also a presentation to Balfour Beatty’s Board by Carillion on July 28.
“This change in the proposed terms is not acceptable to the board of Balfour Beatty.
“Balfour Beatty will proceed in accordance with its own business plan, including the competitive sale process of Parsons Brinckerhoff currently well underway.
“It will also continue to actively progress its search for a group CEO.
“Balfour Beatty confirms there is no material new information on trading since 3 July 2014 and will publish its interim results on August 13.”
Carillion which operates a regional office in Gosforth, employs around 1,500 in the North East, while Balfour Beatty employs around 850 in the region.
In March Balfour Beatty revealed a dramatic slump in profits which it blamed on operational issues in the UK and the sudden cancellation of key projects in Australia.
The firm’s former chief executive Andrew McNaughton departed in May following the news and Balfour Beatty are yet to find a replacement.