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Balfour Beatty has rejected again a second £3 billion merger proposal from UK construction rival Carillion. Balfour Beatty published last Friday the detail of its doubts over the cost savings Carillion said it could obtain from the merger process.
The two companies revealed they were in talks last month, but Balfour rejected publicly Carillion's offer because it planned to cancel the sale of Balfour's US engineering and design business, Parsons Brinckerhoff.
"Cost savings driven by shrinking the business should not be confused with synergies."
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.
Carillion had said it would refocus a combined group's business in the UK to make two-thirds of its profits on services and investments, with just one-third from construction.
Balfour said it would pursue its own cost efficiencies by cutting management layers and streamlining supply chains. The firm expected to sell Parsons Brinckerhoff for between £580 million and £650 million. Balfour said:
Under takeover rules Carillion has until 21 August to make a final offer.