Carillion in talks over £3bn merger

Wolverhampton construction company Carillion is in talks over a merger with its rival Balfour Beatty. The merger would create a £3 billion construction services giant.

If successfully completed, a deal would put the merged group on course for entry into the FTSE-100 index.

Carillion, which is led by chief executive Richard Howson, made the initial approach to its rival and in a joint statement they confirmed preliminary discussions were under way.

Balfour Beatty, which has a market capitalisation of £1.6bn, has been struggling after sacking its chief executive more than two months ago, but Carillion, which is valued at £1.45bn, has seen its shares rise by more than 13 per cent during the last 12 months.

Balfour won a £160m contract last month to construct a new maintenance facility at the Sellafield nuclear power plant, while earlier this week it was awarded a deal by the Highways Agency to upgrade a 13-mile stretch of the M3 to become a smart motorway.

Carillion has won the project to re-develop Liverpool's Anfield ground and has a total order book of £18.5bn. Yesterday it signed a £2.8 billion joint venture deal to improve Army and RAF bases across the UK.