Beleaguered construction services company Carillion (CLLN) is reported to be the subject of a takeover by a Middle Eastern construction company. Its shares rally 18.3% to 55p on the news.
Carillion refused to comment on the proposed takeover although media reports suggest that at least one Middle Eastern firm is putting together an offer for the UK company.
It is understood that the deal is subject to the state of Carillion’s finances. The company is releasing results on Friday which will give the potential buyer a better idea of how much trouble it is in.
ANNUS HORRIBILIS
Carillion saw nearly 75% of its value wiped off in July when the company revealed a £845m writedown due to problems with it contracts. Its market cap is down to £200m compared to its peak of £1.7bn a decade ago.
This writedown resulted in the departure CEO Richard Howson and its dramatic share price crash proved short sellers right. The company had previously been the most shorted for 18 months before July.
There had been prior speculation that the company was going to offload its Middle Eastern operations, the region where a lot of the troubled contracts were focused.
However, one major issue with any potential buyer of Carillion as a whole is the size of its pension deficit. At £650m this is more than three-times its market cap and may present a major stumbling block for any takeover bid.
All those interested will be waiting with bated breathe for Carillion’s delayed first half results released on Friday, 29 September.
