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.

Balfour Beatty said on Friday it had further considered Thursday's announcement from Carillion, and continued to reject the considered assessment of potential cost savings.

Balfour said the proposal involved reducing its British construction revenues by up to two-thirds, which would in turn reduce the potential synergies available. Commenting on this, Balfour said:

"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:

"The board believes this is the right time to sell Parsons Brinckerhoff, but believes Carillion's approach for the entire group at this stage of the construction cycle is opportunistic."

Under takeover rules Carillion has until 21 August to make a final offer.