Shares soar in Carillion amid rising bid speculation

Shares in struggling infrastructure giant Carillion leapt 20 per cent yesterday amid speculation that a Middle Eastern construction firm was weighing a takeover approach for the British business.

Carillion is based in Wolverhampton.

It followed unconfirmed reports that the unnamed firm was lining up a potential offer for the construction group in the wake of its recent sharp share price falls.

The reports said the suitor was also keen to gain access to the Wolverhampton-based firm’s London listing.

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A spokesman for Carillion declined to comment yesterday, while the company’s shares closed down

The report in City AM said it was likely the prospective bidder was waiting for Carillion’s half-year results on Friday before tabling its approach. The company was thrown into turmoil by a major profit warning in July, when its shares shed 70 per cent of their value in a week.

The business, which was demerged from Tarmac’s housing division in 1999, said in its July profit alert that it was looking to sell its Middle East operations, with several local firms said to have been interested.

It said that it was looking to offload a 50 per cent stake in its Oman business,and withdraw from construction markets in Qatar, Saudi Arabia and Egypt. The group also has a business ain the United Arab Emirates.

Carillion chief executive Richard Howson stepped down at the time of the profit warning, as the company said that it needed to strengthen its balance sheet as it attempted to stay within borrowing limits.

Since then the business has also parted company with its finance chief and announced several other senior management changes.

The group has seen sales fall short of expectations, while it booked a £854 million provision earlier this year linked to some UK and overseas contracts that came in the wake of a review by KPMG.

A total of £375m related to the UK and £470m to overseas markets in the Middle East and Canada.

Carillion has previously said its order book has been hit by delays in UK public spending decisions following the Brexit vote, while low oil prices had impacted construction client demand in the Middle East.

David Madden, a market analyst at CMC Markets UK, said: “The upward move in the share price today, pales in comparison to the plunge the share price took in July.”

He said the company might welcome a takeover approach as it struggles with its high debts, “but some shareholders might feel they are being targeted near the all-time low”.