Carillion abandoned plans for a £3 billion mega merger with Balfour Beatty yesterday after its rival rejected a third takeover bid.
The two companies had been at loggerheads since late last month after initially friendly negotiations over a possible tie-up between the firms turned sour over Balfour’s sale of its US business Parsons Brinckerhoff.
The breakdown in talks failed to deter Carillion from pursuing its merger ambitions, and it twice returned to the fray with improved offers for the business.
Carillion said its final offer was worth an extra £200 million.
Its takeover target contended the new proposal only amounted to a £55m improvement.
Balfour which is currently leaderless after chief executive Andrew McNaughton left in May following a poor financial performance dismissed each offer in turn.
The company cast doubt on how much Tuesday’s revised proposal would be worth to Balfour investors and voiced concerns about Carillion’s proposed business plan for the merged company, which it said would significantly reduce the scale of its UK construction business at a time “when it is poised to benefit from a recovery in the market”.
The latest rejection came yesterday morning as a City takeover “put up or shut up” deadline of 5pm today came into view.
Within hours of Balfour’s statement, Carillion informed the stock exchange it was “no longer pursuing” the merger.
Under City rules, Carillion cannot make another approach for the business for a period of six months.
Shares in Balfour Beatty dropped by as much as 8% after the rejection announcement yesterday and there was little sign of a pick-up following Carillion’s decision to withdraw.
Balfour stock closed the day down 6.7% or 17.1p at 238.9p, while shares in Carillion fell 6.7p to 330p.