Carillion has issued a statement on Balfour Beatty’s decision to pull out of merger talks today.
The contractor said: "The Board of Carillion is surprised by Balfour Beatty’s reaction as the work to date has led to increased confidence in the potential to realise very material value for the benefit of both sets of shareholders."
The dealbreaker is understood to be Carillion’s insistence that Balfour abort the disposal of its Parsons Brinckerhoff professional services arm. The business was put up for sale in May this year after the latest in a series of profit warnings.
The statement said the Carillion board thought "it would be essential to retain the stability and dependability of Parsons Brinckerhoff’s earnings".
The board added that it would be making further thoughts know in due course, and ended by pointing out that its statement was not being made with the consent of Balfour.
Stephen Rawlinson, an analyst at Whitman Howard, said: "We can see that Balfour Beatty might be annoyed that Carillion may now think that the merged entity might wish to keep Parsons having previously indicated the sale could go ahead.
"From Carillion’s perspective the discussions were always going to be low risk and the change of heart on the sale of Parsons was correct in our view given that the integrated model works in the USA from what we can see, but not in the UK, especially in the type of regional contracting on which Balfour Beatty is focused.
The prospects for Carillion remain very positive and this may be a lucky escape."