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LONDON Aug 15 British construction firm Balfour
Beatty has reaffirmed its rejection of a second merger
proposal from rival Carillion, publishing the detail of
its doubts over the synergies achievable from any combination.
Balfour has rejected two proposals by Carillion to create a
3 billion pounds ($5.0 billion) group better placed to compete
for major international contracts against the likes of Spain's
The two companies revealed they were in talks last month,
but Balfour walked away only days later after Carillion insisted
it cancel the planned sale of its U.S. engineering and design
business Parsons Brinckerhoff.
Since then the companies have been engaged in a battle of
statements and counter-statements, with Balfour continuing to
argue that Carillion's proposals will fail to deliver as much
value to shareholders as it can as an independent company.
Under takeover rules Carillion has until Aug. 21 to make a
Balfour Beatty said on Friday it had further considered
Thursday's announcement from Carillion, and continued to reject
its suitor's assessment of potential cost savings.
"The proposal remains unchanged to that rejected on Aug. 11
2014. The board reaffirms its rejection of the proposal,"
Balfour said in its statement.
Balfour said it believed the proposal involved reducing its
British construction revenues by up to two thirds and that that
would in turn reduce the potential synergies available.
Carillion has said it could save more than 175 million
pounds a year by the end of 2016, more than some analysts
expected, by streamlining offices, supply chains and IT.
"Cost savings driven by shrinking the business should not be
confused with synergies," Balfour said.
Balfour also said that any shrinking of its British
construction business as part of a merged group would deny
shareholders the benefits from a recovery in that sector, signs
of which it was already seeing.
The approach from Carillion in July followed a difficult 18
months for Balfour Beatty, which has had a series of profit
warnings and lost its CEO Andrew McNaughton in May. Its shares
have slumped 22 percent over the last six months.
"Carillion's approach for the entire group at this stage of
the construction cycle is opportunistic," Balfour said in its
($1 = 0.5991 British Pounds)
(Reporting by Sarah Young, editing by James Davey)