After the Carillion-Balfour Beatty courtship was abruptly called off last Thursday over Carillion’s late-in-the-day insistence that Parsons Brinckerhoff should remain in Balfour Beatty’s ownership, the two companies have been anxious to get their side of the story into the press.
Balfour Beatty was forced onto the defensive by Carillion’s statement that it “continued to believe in the powerful strategic rationale of a combination and the capability of such a combination to create very significant shareholder value” and its promise of a “future announcement”.
First, Balfour Beatty executive chairman Steve Marshall spoke to Construction News hours after the 7am statement that informed the markets of Balfour Beatty’s change of heart.
He was at pains to suggest that Balfour Beatty had entered talks reluctantly, saying the board had taken “a lot of convincing” and “in retrospect… I think we should all have preferred to be doing other things”. The upshot, he said, was that Balfour Beatty was moving on with its life and once again pursuing the strategy announced on 6 May.
The next day, Marshall was on the line to Building, saying that Carillion was “not in a position to [make a hostile takeover bid] given the arrangements that we agreed” and pointing out that “anyone making a hostile bid needs money”. As Building noted, in its accounts for the year to the end of 2013 Carillion reported net borrowing of £215m.
The Sunday papers then took up the story, with analysis pieces in both The Sunday Telegraph and The Sunday Times.
Both suggested that Carillion’s chief executive Richard Howson had not quite insisted that Balfour Beatty halt the sale of Parsons Brinckerhoff, more that it should slow down the bidding process to allow time for merger talks to progress.
But The Sunday Times, quoting sources, said that “Marshall was said to have been uncomfortable with running an auction – encouraging bidders to pump millions of pounds into due diligence – with the secret knowledge that it would be pulled”.
But the paper also suggested that Carillion’s due diligence might have “uncovered further skeletons” and therefore it “could not make the deal stack up without the profits from the American services business – about £54m of the group’s £203m profits last year.”
The Sunday Telegraph quotes a source “close to Carillion” making that point. “All we said was, because of the visibility of their numbers, we can see how fragile it is, and how dependent on PB Balfour had become.”
It added that Carillion is frustrated by the fact that it was Balfour’s board, rather than its shareholders, that decided the fate of the merger.
Canvassing the opinion of investors and analysts, the paper says that “some… are unhappy that Carillion appeared to be insisting on holding on to PB for the merger to continue. Others, however, are unhappy that Marshall and Balfour’s board seemed to have taken the possible end of the PB sale process as a personal affront.”
Interestingly, both papers suggested that the saga may not be quite over, with speculation that the two sides would come under pressure from shareholders to reconsider their options and start talking again – although the deadline for any deal to be announced is 21 August.
But the resumption of merger talks seemed less likely on Monday, with reports in The Times and The Telegraph naming Atkins and WSP as potential buyers of Parsons Brinckerhoff, and also suggesting that other private equity buyers were in the race.
