Bid battle may follow Carillion's Balfour Beatty approach, Brewin Dolphin says

15th Aug 2014 11:35

Investors in takeover target Balfour Beatty should sit tight in case a bid battle breaks out for the construction company, according to broker Brewin Dolphin.Brewin said Balfour's latest rejection of overtures from suitor Carillion on Friday appeared to eliminate the chances of a friendly merger between the pair and Carillion was likely to go hostile or walk away.Carillion approached Balfour last month about a potential merger and talks began, but Balfour called off the discussions after Carillion said it wanted it to abandon its planned sale of US engineering consultancy Parsons Brinckerhoff.Carillion has since talked to Balfour's shareholders and highlighted the potential benefits of a deal, but Balfour on Friday again dismissed the approach, calling it "opportunistic".Balfour would be a "nice-to-have" rather than a "need-to-have" asset for Carillion and the latter has a bright future with or without it, Brewin said.But Balfour's statement on Friday was defensive and Carillion, which would appear to have the majority of its large shareholders on its side, was now very much ahead in the battle, the broker said.Brewin analyst Stephen Williams said, however, that Balfour could now be said to be 'in play' and there was always the chance that a "white knight" would come to its rescue. Williams said: "We would sit tight for now."Shares in Balfour rose 1.5p or 0.6% to 241.6p at 12:10 in London, while Carillion's stock fell 8.7p or 2.5% to 338.1p.PW