The Boards of Carillion and Balfour Beatty have confirmed that, following an approach from Carillion to Balfour Beatty, the two companies are engaged in preliminary discussions in relation to a possible merger of Carillion and Balfour Beatty.
The Boards of Carillion and Balfour Beatty believe that the merger of the two groups has the potential to create a market leading services, investments, and construction business of considerable depth and scale. Work is now underway to develop a strategy and outline business plan for a combined entity, underpinned by the evaluation of achievable synergies, future financing arrangements and a number of other essential supporting workstreams. In evaluating the merits of the merger, the two boards will, inter alia, wish to be satisfied that such a merger would lead to very significant value creation for the benefit of both sets of shareholders.
The two parties have agreed that Balfour Beatty’s publicly announced sale process for Parsons Brinckerhoff, which is already underway, will proceed unaffected by this announcement, subject to achieving acceptable value and terms.
The Boards of Carillion and Balfour Beatty note that they would only proceed with a merger if, inter alia, (i) both Carillion and Balfour Beatty were to conclude due diligence to their satisfaction; and (ii) the Boards of Carillion and Balfour Beatty were to recommend it to their shareholders. In accordance with Rule 2.5(c)(i) of the Code, Carillion and Balfour Beatty confirm that the pre-conditions referenced in (i) and (ii) above must be satisfied prior to the agreement of any transaction.
No final decision has been reached regarding the structure of any merger. Accordingly until further notice, for the purposes of the Code, both Balfour Beatty and Carillion will be treated as offeree companies.
As required by Rule 2.6(a) of the Code each of Carillion and Balfour Beatty are required, by not later than 5.00 p.m. on 21 August 2014, to either announce a firm intention to undertake a transaction in accordance with Rule 2.7 of the Code or announce that they do not intend to undertake a transaction, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. Either deadline may be extended with the consent of the Panel in accordance with Rule 2.6(c) of the Code.
A further announcement will be made in due course, as appropriate. In the meantime, there can be no certainty that any offer will be made by either Carillion or Balfour Beatty or as to the terms on which any such offer might be made.