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Carillion/Balfour Beatty: hard hats: The increasingly bitter dalliance of Carillion and Balfour Beatty (billed as a merger, but it would be an acquisition of the latter by the former) shows why. The two builders have been talking on and off for months, but have started to trade barbs about the likelihood of a deal. Carillion is keen; Balfour Beatty less so. Balfour should win the argument. First, the cost savings. Carillion promises £175 million, which is 16% of the combined operating cost base. It puts the taxed and capitalised value of the savings at £1.5 billion, and although that looks a little generous, it does suggest that lots of value could be added to the combined £3.1 billion market cap. Carillion has made acquisitions before – Mowlem in 2006 and Alfred McAlpine in 2008 – so knows about integration. There is no need for Carillion to become involved with Balfour. It has done nicely enough since the crisis by taking risk out of its construction business. Its share price is up 93% since the depths of the crisis; Balfour’s is up 7%. Warren Buffett has opined on what happens when good management teams meet poor companies (the latter prove decisive). This is an unnecessary, risky pursuit of scale for its own sake. Carillion should abandon it. Lombard: Balfour’s bear necessity: Easy, Bruin. We know you’re frisky, but you could hurt someone. Services group Carillion is attempting a classic bear hug on Balfour Beatty, a struggling builder. The tactic involves forcing a target to agree its own purchase by applying pressure through investors. Bear hugs are useful when ambiguous shares are the main currency, not cold, convincing cash. On Thursday Carillion pressed the face of Steve Marshall, acting Chairman of the construction group, a little deeper in its chest fur by publishing pledges made to some shareholders. Chairman Philip Green promises cost synergies of at least £175 million by 2016. Capitalising the savings gives them a value of £1.5 billion, about half the combined value of the two companies. Fast and dirty sums show that the dividend and share ratio equate to a control premium of 24.5p or about 10% at Thursday’s closing prices. This is a slim difference to the amount Balfours expects to pay out after selling Parsons Brinckerhoff, a consultancy that Carillion wants to retain in the merged business. The tussle therefore resolves into one of Managerial competence. Carillion is a stronger business than Balfour, as illustrated by financial results reported by both companies this week. Balfour shareholders should encourage Mr Marshall to yield to the bear before it squashes him anymore.
Thousands of British construction jobs could be lost if Balfour Beatty was to accept Carillion's proposed merger offer to create a 3 billion pound ($5 billion) giant, the Times reported on Thursday, citing sources. Balfour's Executive Chairman Steve Marshall and Carillion CEO Richard Howson had a fundamental falling out over the future size and shape of Balfour's UK construction arm, the daily said, without plainly stating who its sources were. (Reuters)
looks as though there will be another try by carillion to force the issue
Just spotted that on the chat bbs before heading to bed. Sorry I had construed your comments on the deb's bb on 29th July "I am on the other side of the bby deal. I did notice the spike in share price whilst on the boat but it still offers a good divi so I am holding despite my spreadsheet suggesting I sell. " as you being a bby shareholder as you say you're not much of a trader. Goodnight.
I haven't sold cos I didn't have any although its been on a watch list for a while. It might be staying there now selling the best bits and getting rid of the cash whilst still holding all that debt. I like a high divi but .... might be one for a dogs of the ftse play. l think I would like to see how they intend to turn things around till then got just one eye on this.
and after demanding to know whether I was still invested here or not lol. back to my crumble mix.
£200m for 690m shares approximates to about 29p, Hardly worth waiting for given they are disposing of the most profitable arm. As Gerry557 says, better to reduce debt first. Shareholders want to see some recovery and a merger would be best bet to increase mass. Perhaps the Parsons sale is a good one including factors BBY board are aware of. But surely this would have come out during due diligence, though? It didn't alter Carillion's view on it's retention. Let battle commence!
I'm not invested here but have been watching because of the divi. The £200M being "returned to investors" sounds great but is it really? I love a divi but it is above avg anyway. Once that £200M has gone it leaves the company with high levels of debt and hence quite a headwind to improve things. They might be better reducing some of that debt and investing in the business to make it more efficient and able to withstand the longer term. Im sure in the short term the SP might improve on the hope of the sweetener being offered but is it a case of the Emperors clothes?
Balfour brickbats: The gulf between Balfour Beatty and would-be merger partner Carillion appears unbridgeable. The construction group has rejected a revised £3 billion proposal from the support services company. Rightly so, since this was tweaked rather than significantly improved. Carillion – Tarmac, as was – seems to have problems thinking itself into the shoes of others. Initial talks foundered because Carillion unexpectedly demanded that Balfours retain Parsons Brinckerhoff, a consultancy it is auctioning. The best Carillion could then do by way of a sweetener was to suggest that it would keep that process alive, reimbursing bidders’ costs if the merger proceeded and took Parsons off the table. Carillion has been unrealistic about the flexibility that can be expected of counter parties. But Balfour is starry-eyed in believing it has much future as an independently-quoted business. Construction is low-margin, cyclical and risky. This was illustrated by a 53% fall in Balfour’s half year underlying profits to £22 million. The problems were in the U.K. Balfour is therefore focusing on the U.S. But diversification only works if the risk profile of the whole business can be improved. Some other quoted construction groups have judged this unachievable and quit the sector instead.
Balfour dangles £200 million in front of investors as it rejects merger again: Balfour Beatty offered a £200 million sweetener to shareholders, despite tumbling profits, as the building company rejected a second overture from rival Carillion over a £3 billion merger.
rating with a 1.83 target . Go figure !
BALFOUR BEATTY PLC RESULTS FOR THE HALF-YEAR ENDED 27 JUNE 2014 Balfour Beatty, the international infrastructure group, reports its financial results for the half-year ended 27 June 2014. The Group is currently in an offer period which ends on 21 August 2014. This deadline may be extended by agreement between the parties and the consent of the Takeover Panel. The Group's income statements have been re-presented to classify the Mainland European rail business in Italy within discontinued operations. Summary · Overall first-half results are in line with our most recent trading update. · Review of the Directors' Valuation of our UK PPP portfolio has been completed over the first half to take into account current market conditions. An update will be released as soon as possible. · Competitive sale process of Parsons Brinckerhoff is well advanced. Subject to satisfying the interests of key stakeholders, it is anticipated that the Group will return up to £200 million to shareholders. · Operational issues in our UK mechanical & electrical engineering business significantly impacted overall first- half financial performance. Remedial action plan and cost efficiencies are being implemented. · Elsewhere in Construction Services the US performed strongly, with 14% revenue growth at constant currency whilst the order book remained stable. Good wins in Asia and the Middle East. · Professional Services performance is in line with 2013, increased profitability in Support Services. · Infrastructure Investments delivered another good performance, with disposal proceeds significantly above the Directors' Valuation. · Underlying2, 3 half-year pre-tax profit of £22 million (2013: £47 million) and underlying2, 3 EPS of 3.9 pence (2013: 6.6 pence). · Order book2 stable at £13.0 billion, down 1% from the year end at constant currency. · Interim dividend of 5.6 pence per ordinary share (2013: 5.6 pence per ordinary share).
Well done both on the fres. I am holding till the £20 to keep hughsie company lol. Clyde is the Commonwealth Games mascot. Millport have a big one made from plants and hedging topiary. Just learned the the wood for the handle of the Queen's baton was made of elm grown on the island. Hope the rain is off for tomorrow long tailbacks on motorway.
You'll need to give us a clue as to Clyde...two tumchie heids staunin the gether....( the vernacular to confuse eavesdroppers) Check FRES....said to Robert very recently....north.....tell yer mammy tae buy some mair wool....ma heids getting cauld. LOL......
Had a little punt on tw. for a change and it worked out okay. Will look out for minutes of mpc meeting. LOL nobody on the fres bb to capture the £10 plus moment. Had a "little" walk round big Cumbrae today. Had feet in foot spa and still sore . Had no idea there were so many walks to do there and my photo taken with Clyde definitely not marketed enough and the Cathedral - special.
New contract ready to kick off http://www.constructionenquirer.com/2014/08/05/balfour-to-start-stalled-41m-edinburgh-school/
Well what's a girl to say to that! As one poster as already said going to be an interesting soap here for a while but I think today is about one or two members of the MPC reportedly calling for a hike in interest rates. I wasn't invested here but took a chance a couple of times on the profit warning(s) news because of the talk of returning something to the shareholders from the disposal of PB. Left for the tsb flotation at £2.40 something. Lots of ups and downs since. Currently no but definitely mabye as Noel and Liam would have put it.
Y or N?
Carillion seeks allies in its pursuit of Balfour Beatty: Carillion, the contractor whose attempted merger with Balfour Beatty collapsed with some acrimony last week, is planning to approach investors who also have stakes in its quarry to get them to put pressure on the company to return to the negotiating table.
Balfour is, indeed, the weaker party but now Carillion has really shot itself in the foot - if not amputated it! This, of course, is only the beginning of what promises to be an entertaining soap! Balfour s/p reaction reflects the increased possibility of other bidders entering the fray. The construction & support sector is overcrowded and consolidation is overdue. Pinkers expects a wave of M&A in the next couple of years. Furthermore, as opposed to highly valued (overvalued?) consumer stocks, this sector is dirt cheap, offering healthy yields at low P/E ratios, even when measured on CAPE. 'Undone!': http://pinkerspost.com/inout.php
Carillion prepares ‘bear hug’ siege on Balfour Beatty: Carillion is to step up its pursuit of weakened rival Balfour Beatty with a “bear hug” attack as it races to create a £14 billion construction and support services giant.
British engineering group WS Atkins is going head-to-head against its Canadian rival WSP for the $1bn business responsible for the break down of merger talks between Balfour Beatty and Carillion. The two trade rivals are understood to be competing with two private equity firms to take control of Parsons Brinckerhoff, Balfour Beatty’s US consultancy arm. The division, which Balfour bought in 2009, is at the centre of the public fall-out between the UK’s biggest construction company and its would-be merger partner Carillion. The bidding process, being marshalled by Goldman Sachs, is at a second-round stage, with sources suggesting one of the two trade buyers is more likely to win out rather than one of the financial suitors.
Parsons was never in the pot, so why all the fuss from carrillion.
Balfour is, indeed, the weaker party but now Carillion has really shot itself in the foot - if not amputated it! This, of course, is only the beginning of what promises to be an entertaining soap! Balfour s/p reaction reflects the increased possibility of other bidders entering the fray. The construction & support sector is overcrowded and consolidation is overdue. Pinkers expects a wave of M&A in the next couple of years. Furthermore, as opposed to highly valued (overvalued?) consumer stocks, this sector is dirt cheap, offering healthy yields at low P/E ratios, even when measured on CAPE. 'Undone!': http://pinkerspost.com/inout.php
A wee rush of blud tae the heid then.....wonder who was buying?