Balfour Beatty and Carillion have revealed that they are in talks over a possible merger.
A statement on the talks 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 this announcement, subject to achieving acceptable value and terms.”
The companies have until 21 August 2014, to either announce a firm intention to merge or state that they do not intend to undertake a transaction.
The statement continued: “A further announcement will be made in due course, as appropriate. In the meantime, there can be no certainty that any offer will be made by either Carillion or Balfour Beatty or as to the terms on which any such offer might be made.”