A press release said:
The Boards of Carillion and Balfour Beatty believe that the merger of the two groups has the potential to create a market leading services, investments, and construction business of considerable depth and scale. Work is now underway to develop a strategy and outline business plan for a combined entity, underpinned by the evaluation of achievable synergies, future financing arrangements and a number of other essential supporting workstreams. In evaluating the merits of the merger, the two boards will, inter alia, wish to be satisfied that such a merger would lead to very significant value creation for the benefit of both sets of shareholders.
The two parties have agreed that Balfour Beatty's publicly announced sale process for Parsons Brinckerhoff, which is already underway, will proceed unaffected by these negotiations. The sale will be subject to achieving acceptable value and terms.
(ii) the Boards of Carillion and Balfour Beatty were to recommend it to their shareholders. Carillion and Balfour Beatty confirm that the pre-conditions referenced in (i) and (ii) above must be satisfied prior to the agreement of any transaction.
The companies said that no final decision has been reached regarding the structure of any merger.
Both firms will be required, by not later than 21 August 2014, to either announce a firm intention to undertake a transaction or announce that they do not intend to undertake a transaction.
The companies said that a further announcement will be made in due course, as appropriate.