TIDMBBY TIDMCLLN
RNS Number : 5921P
Balfour Beatty PLC
20 August 2014
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, IN OR INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH
JURISDICTION
THIS ANNOUNCEMENT IS NOT AN ANNOUNCEMENT OF A FIRM INTENTION TO
UNDERTAKE ANY TRANSACTION UNDER RULE 2.7 OF THE CITY CODE ON
TAKEOVERS AND MERGERS (THE "CODE") AND THERE CAN BE NO CERTAINTY
THAT ANY TRANSACTION WILL PROCEED NOR AS TO THE TERMS OF ANY
TRANSACTION
FOR IMMEDIATE RELEASE
20 August 2014
Balfour Beatty plc
Rejection of Carillion's Proposal
The Board of Balfour Beatty has considered the terms of the
revised merger proposal from Carillion plc ("Carillion") dated 19
August 2014 and consulted with its major shareholders.
The revised proposal again fails to address the two key concerns
that Balfour Beatty has consistently raised:
1. The considerable risks associated with the proposed business
plan, including the strategy to significantly reduce the scale of
the UK Construction business when it is poised to benefit from a
recovery in the market; and
2. The continued intention to terminate the sale of Parsons
Brinckerhoff at a point when it is reaching a successful
conclusion.
Accordingly, the Board has unanimously concluded that the
proposal is not in the best interests of its shareholders and has
decided to reject the proposal. Therefore the Board will not be
seeking an extension to the PUSU ("Put Up or Shut Up") deadline of
5pm on 21 August 2014.
The Board also notes that the revised proposal represents only a
small value change in the terms compared to the proposal from
Carillion rejected on 11 August 2014. Further details are set out
within the Appendix.
The Board of Balfour Beatty will therefore continue to be
focused on delivering its standalone strategy as set out in the
Group's interim results announcement on 11 August 2014. The key
priorities are as follows:
-- Concluding the Parsons Brinckerhoff sales process at an
attractive value, and consequently returning up to GBP200 million
of capital to Balfour Beatty shareholders;
-- Recruiting an outstanding Group CEO;
-- The restoration of value from the UK construction business
including progressively returning it to peer group margins;
-- Realising further indirect overhead savings and shared
service efficiencies across the Group, where all of the benefits
will accrue to its shareholders; and
-- Publishing the updated valuation of the PPP portfolio which
takes into account current market conditions.
The Board will also remain open to strategic value creating
opportunities across the Group while it concentrates on the
restoration of value to its shareholders. It will consider all such
opportunities, and the risks associated with their execution,
taking full account of the significant recovery potential within
the Balfour Beatty business.
There can be no certainty that an offer will be made by
Carillion for Balfour Beatty nor as to the terms of any such
offer.
This announcement is not being made with the consent of
Carillion.
ENDS
Enquiries:
Balfour Beatty
Anoop Kang, Head of Investor Relations
+44 (0) 20 7216 6913
anoop.kang@balfourbeatty.com
Patrick Kerr, Director of Corporate Communications
+44 (0) 20 7963 4258
patrick.kerr@balfourbeatty.com
Goldman Sachs (Lead Financial Adviser and Corporate Broker to
Balfour Beatty)
Anthony Gutman
Philip Shelley
Owain Evans
+44 (0) 20 7774 1000
BofA Merrill Lynch (Joint Financial Advisor and Corporate Broker
to Balfour Beatty)
Michael Findlay
Justin Anstee
Georgina Stober
+44 (0) 20 7628 1000
Maitland
Neil Bennett
Liz Morley
James Isola
+44 (0) 20 7379 5151
Directors' Responsibility Statement
The Directors of Balfour Beatty accept responsibility for the
information contained in this document. To the best of the
knowledge and belief of the Directors, who have taken all
reasonable care to ensure such is the case, the information
contained in this document is in accordance with the facts and does
not omit anything likely to affect the import of such
information.
This announcement is for information purposes only and does not
constitute an offer to sell or an invitation to purchase any
securities or the solicitation of an offer to buy any securities,
pursuant to the offer or otherwise.
Disclosure requirements of the Code
Under Rule 8.3(a) of the Code, any person who is interested in
1% or more of any class of relevant securities of an offeree
company or of any securities exchange offeror (being any offeror
other than an offeror in respect of which it has been announced
that its offer is, or is likely to be, solely in cash) must make an
Opening Position Disclosure following the commencement of the offer
period and, if later, following the announcement in which any
securities exchange offeror is first identified. An Opening
Position Disclosure must contain details of the person's interests
and short positions in, and rights to subscribe for, any relevant
securities of each of (i) the offeree company and (ii) any
securities exchange offeror(s). An Opening Position Disclosure by a
person to whom Rule 8.3(a) applies must be made by no later than
3.30 pm (London time) on the 10th business day following the
commencement of the offer period and, if appropriate, by no later
than 3.30 pm (London time) on the 10th business day following the
announcement in which any securities exchange offeror is first
identified. Relevant persons who deal in the relevant securities of
the offeree company or of a securities exchange offeror prior to
the deadline for making an Opening Position Disclosure must instead
make a Dealing Disclosure.
Under Rule 8.3(b) of the Code, any person who is, or becomes,
interested in 1% or more of any class of relevant securities of the
offeree company or of any securities exchange offeror must make a
Dealing Disclosure if the person deals in any relevant securities
of the offeree company or of any securities exchange offeror. A
Dealing Disclosure must contain details of the dealing concerned
and of the person's interests and short positions in, and rights to
subscribe for, any relevant securities of each of (i) the offeree
company and (ii) any securities exchange offeror, save to the
extent that these details have previously been disclosed under Rule
8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies
must be made by no later than 3.30 pm (London time) on the business
day following the date of the relevant dealing.
If two or more persons act together pursuant to an agreement or
understanding, whether formal or informal, to acquire or control an
interest in relevant securities of an offeree company or a
securities exchange offeror, they will be deemed to be a single
person for the purpose of Rule 8.3.
Opening Position Disclosures must also be made by the offeree
company and by any offeror and Dealing Disclosures must also be
made by the offeree company, by any offeror and by any persons
acting in concert with any of them (see Rules 8.1, 8.2 and
8.4).
Details of the offeree and offeror companies in respect of whose
relevant securities Opening Position Disclosures and Dealing
Disclosures must be made can be found in the Disclosure Table on
the Takeover Panel's website at www.thetakeoverpanel.org.uk,
including details of the number of relevant securities in issue,
when the offer period commenced and when any offeror was first
identified. You should contact the Panel's Market Surveillance Unit
on +44 (0)20 7638 0129 if you are in any doubt as to whether you
are required to make an Opening Position Disclosure or a Dealing
Disclosure.
Publication on website
A copy of this announcement will be made available subject to
certain restrictions relating to persons resident in restricted
jurisdictions on Balfour Beatty's website at www.balfourbeatty.com
by no later than 12 noon (London time) on 21 August 2014.
The content of the website referred to in this announcement is
not incorporated into and does not form part of this
announcement.
Further information
Goldman Sachs International, which is authorised by the
Prudential Regulation Authority and regulated by the Financial
Conduct Authority and the Prudential Regulation Authority in the
United Kingdom, is acting as financial adviser to Balfour Beatty
and no one else in connection with the matters referred to in this
announcement. In connection with such matters Goldman Sachs
International, its affiliates and its and their respective
directors, officers, employees and agents will not regard any other
person as their client, nor will they be responsible to anyone
other than Balfour Beatty for providing the protections afforded to
clients of Goldman Sachs International, or for giving advice in
connection with the contents of this announcement or any other
matter referred to herein.
Merrill Lynch International ("BofA Merrill Lynch"), a subsidiary
of Bank of America Corporation, is acting exclusively for Balfour
Beatty in connection with the matters referred to in this
announcement and for no one else and will not be responsible to
anyone other than Balfour Beatty for providing the protections
afforded to its clients or for providing advice in relation to the
contents of this announcement or any other matter referred to
herein.
Forward-looking statements
This announcement may include certain forward-looking
statements, beliefs or opinions, including statements with respect
to Balfour Beatty plc's business, financial condition and results
of operations. These forward-looking statements can be identified
by the use of forward-looking terminology, including the terms
"believes", "estimates", "plans", "anticipates", "targets", "aims",
"continues", "expects", "intends", "hopes", "may", "will", "would",
"could" or "should" or, in each case, their negative or other
various or comparable terminology. These statements are made by the
Balfour Beatty plc Directors in good faith based on the information
available to them at the date of this announcement and reflect the
Balfour Beatty plc Directors' beliefs and expectations. By their
nature these statements involve risk and uncertainty because they
relate to events and depend on circumstances that may or may not
occur in the future. A number of factors could cause actual results
and developments to differ materially from those expressed or
implied by the forward-looking statements, including, without
limitation, developments in the global economy, changes in UK and
US government policies, spending and procurement methodologies, and
failure in Balfour Beatty's health, safety or environmental
policies.
No representation or warranty is made that any of these
statements or forecasts will come to pass or that any forecast
results will be achieved. Forward-looking statements speak only as
at the date of this announcement and Balfour Beatty plc and its
advisers expressly disclaim any obligations or undertaking to
release any update of, or revisions to, any forward-looking
statements in this announcement. No statement in the announcement
is intended to be, or intended to be construed as, a profit
forecast or profit estimate and no statement in the announcement
should be interpreted to mean that earnings per Balfour Beatty plc
share for the current or future financial years will necessarily
match or exceed the historical earnings per Balfour Beatty plc
share. As a result, you are cautioned not to place any undue
reliance on such forward-looking statements.
Rounding
Certain figures included in this announcement have been
subjected to rounding adjustments.
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART
IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A
VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION.
THIS ANNOUNCEMENT DOES NOT CONSTITUTE A TAKEOVER OFFER OR AN OFFER
OF SECURITIES. NO OFFER OR SALE OF SECURITIES MAY OCCUR IN THE
UNITED STATES UNLESS THE TRANSACTION HAS BEEN REGISTERED UNDER THE
US SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR IS EXEMPT FROM
REGISTRATION THEREUNDER. NO SECURITIES HAVE BEEN OR WILL BE
REGISTERED UNDER THE SECURITIES ACT AND THERE WILL BE NO PUBLIC
OFFER OF SECURITIES IN THE UNITED STATES.
APPENDIX
The revised proposal from Carillion represents an increase in
value of GBP55m compared to the proposal rejected on 11 August 2014
on the basis set out below.
In Carillion's announcement on 19 August 2014, the pro forma
market capitalisation of Balfour Beatty is calculated by reference
to the new shares issued by Carillion and Carillion's closing share
price as at 18 August 2014. Balfour Beatty shareholders will also
receive the proposed cash dividend of GBP59 million. On this basis
Carillion calculates a total equity value offered for Balfour
Beatty of GBP2,086m.
Balfour Beatty notes two issues with the valuation methodology
used by Carillion: first, it implicitly assumes that the market
capitalisation of the pro forma combined group increases as the
number of Carillion shares issued increases; secondly, Carillion's
methodology does not take into account the impact of the proposed
dividend payment on the pro forma market capitalisation, which
would be funded 58.268% by Balfour Beatty shareholders.
An alternative methodology is set out below which takes into
account these factors:
-- The combined market capitalisation for the proposed combined
business is GBP3,162 million based on adding together the market
capitalisations of Balfour Beatty and Carillion (based on closing
prices as at 18 August 2014).
-- This combined market capitalisation is then reduced by the
proposed dividend payment of 8.5p per Balfour Beatty share (GBP59
million in total), to GBP3,103 million.
-- Based on Carillion's revised proposal, Balfour Beatty would
receive 58.268% of this combined market capitalisation. This
equates to GBP1,808 million, equivalent to 262p per Balfour Beatty
share.
-- The total value to Balfour Beatty shareholders should include
the proposed dividend of 8.5p. On this basis, the total value to
Balfour Beatty shareholders increases to GBP1,867 million,
equivalent to 271p per Balfour Beatty share.
-- Using the same methodology, the total value to Balfour Beatty
shareholders of the proposal rejected on 11 August 2014 is GBP1,812
million, equivalent to 263p per Balfour Beatty share. The revised
proposal therefore represents a value uplift of GBP55 million.
SOURCES AND BASES
Unless otherwise stated, financial and other information
concerning Balfour Beatty and Carillion has been extracted from
publicly available sources or from Balfour Beatty's management
sources.
The Appendix is based on the following:
-- Balfour Beatty closing share price on 18 August 2014 of
248.0p (sourced from Thomson Reuters), and 689,500,514 ordinary
shares outstanding.
-- Carillion closing share price on 18 August 2014 of 337.4p
(sourced from Thomson Reuters), and 430,254,629 ordinary shares
outstanding.
-- The total value to Balfour Beatty shareholders of the
proposal rejected on 11 August 2014 assumes that Balfour Beatty
shareholders receive 56.5% of the combined group and the proposed
dividend payment of GBP59 million.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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