Carillion would leapfrog Laing O’Rourke to become the UK’s second largest contractor if the takeover goes ahead.
Based on 2006 figures the deal would give the combined company a contracting turnover of £2.3bn, £3bn behind Balfour Beatty but £200m ahead of Laing O’Rourke.
City sources believe Carillion is unlikely to proceed with the sale of McAlpine’s PFI arm, which was announced in the contractor’s proposed demerger plans earlier this month. Analysts believe that Carillion is likely to bring the business in-house.
The sale of the troubled slate business, on the other hand, which was also announced in the demerger plans, is believed to be imminent.
Carillion has jumped the gun in the race for McAlpine’s highly valued project services business by going for McAlpine before the proposed demerger.
The demerger would have made the newly created project service company ripe for takeover and would have been expected to generate much interest.
Despite Carillion’s troubled takeover of Mowlem, which led to it taking a £135m hit after wrongly valuing contracts, analysts believe the integration of the two businesses has been a success. They also believe Carillion will be able to do the same with McAlpine.
Alastair Stewart, an analyst at Dresdner Kleinwort, said: “It makes sense operationally for Carillion in our view, and McAlpine has parallels with Mowlem.”
However, any deal is likely to lead to an exodus of McAlpine staff because of cost cutting. Carillion made 300 redundancies after the takeover of Mowlem, and it is understood that many more former Mowlem workers have since left the company.
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