Apparently, Carillion WILL Give Up

PUBLISHED: 20 Aug 2014 @ 18:36 | Comments (0) | More info about Lou Gutheil

That’s right, my headline yesterday said that “Carillion Won’t Give Up on Balfour Beatty.” But that was then and this is now. Shares of both Carillion (LSE:CLLN) and Balfour Beatty (LSE:BBY) backed off today after the latter once again turned down Carillion’s takeover proposal and Carillion officially called it quits. Balfour Beatty share price closed down 6.68% to 238.90 after opening at 242.00. Carillion share price closed down 1.99% to 330.00 after opening at 333.80.

Balfour Beatty announced early this morning that, following consultation with major shareholders, “The Board has unanimously concluded that the proposal is not in the best interests of its shareholders and has decided to reject the proposal.” Last week Balfour issued a list of reasons why it would not consider Carillion’s initial offer. This morning it simply listed three:

“The considerable risks associated with the proposed business plan, including the strategy to significantly reduce the scale of the UK Construction business when it is poised to benefit from a recovery in the market.”
“The continued intention to terminate the sale of Parsons Brinckerhoff at a point when it is reaching a successful conclusion.”
“The revised proposal represents only a small value change in the terms compared to the proposal from Carillion rejected on 11 August 2014.”

Carillion responded at 3:00 GMT that it “is no longer pursuing such a merger.” That does not preclude another offer in the future. However, it is becoming increasingly more apparent that Balfour Beatty is quite serious about implementing its current strategy of reducing the complexity of the business to focus on core competencies and increased shareholder value.

It is also worth noting that the sale of Parsons Brinckerhoff is expected to return some £200 million to shareholder pockets. It’s fairly reasonable to assume that Balfour Beatty’s major shareholders didn’t see the point in Carillion mucking that up.

So, in the words of the King (Elvis, that is): “So I turn my back, Turn my collar to the wind, Move along in silence, Trying not to think at all, I set my feet before me, Walk the silent street before me. Now it’s over.“

(“It’s Over” lyrics by Jimmy Rodgers, © Universal Music Publishing Group, et. al.)

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