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Britain's Carillion lifted by Middle East bid report
September 27, 2017 / 7:17 AM / 21 days ago

Britain's Carillion lifted by Middle East bid report

FILE PHOTO: A Carillion sign is seen in Manchester, Britain July 13, 2017. REUTERS/Phil Noble/File Photo

(Reuters) - Takeover speculation drove Carillion (CLLN.L) shares almost 20 percent higher on Wednesday after a London newspaper reported that a Middle Eastern firm was preparing a bid for the struggling construction and support services company.

A spokeswoman said Carillion did not comment on "market speculation" in response to a City A.M. report on Tuesday which said a Middle Eastern construction group planned to submit a letter of intent for a takeover. (bit.ly/2fraUwK)

Carillion, whose market capitalization has dropped to 200 million pounds ($268 million) from a peak of 1.67 billion pounds a decade ago, is set to report first-half results on Friday.

City A.M. reported that the potential buyer would wait to analyze Carillion’s results and the state of its finances before tabling any bid.

Shares in Carillion have fallen nearly 75 percent since mid-July when it booked an 845 million pound writedown on construction contracts and announced the departure of its chief executive.

Carillion’s troubles have been compounded by its debt and pension obligations, as well as problems collecting cash.

The company said in July its first half average net debt was 695 million pounds, while its pension deficit net of tax was 587 million pounds. Carillion is selling non-core businesses and has suspended its dividend to try to reduce its debt burden.

Winning new contracts had become harder as spending in the Middle East adjusted to lower oil prices, and the firm had also experienced some delays in British public spending decisions since Britain voted to leave the European Union.

Carillion has said it will focus on rail and property services as it seeks to turn itself around.

Reporting by Noor Zainab Hussain in Bengaluru; Editing by Rachel Armstrong and Alexander Smith

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