Carillion and Balfour Beatty surprised the entire construction industry with news that they are in talks about a merger.

A merger would create a contracting group with a major presence in both the infrastructure contracting and services markets with a combined turnover of £14Bn.

Some rivals might fear the creation of such a super-power among contractors, but one senior figure from a rival firm suggested that the merger could be of benefit to the UK.

“I certainly did not see this coming and I don’t think the move was widely predicted,” he said. “But we should not see this as being about creating one super contractor that gobbles up work from other firms in the UK.

“This is more about extending global influence. We could end up with a large UK based organisation that is seen as a major international contractor which flies the flag for Britain overseas.”

A second senior figure in transportation said: “News of this possible merger did initially come as a shock, but given recent financial troubles for Balfour Beatty maybe it was not so surprising. Competition is still there among contractors in the UK but we are moving towards a period where the industry may become dominated by a few very large contractors – and a few large consultants too.”

In a joint statement both Balfour Beatty and Carillion said a merger “has the potential to create a market leading services, investments and construction business of considerable depth and scale.” Work is under way to develop a strategy and an outline business plan for a combined company.

It has been agreed by the two parties that Balfour Beatty’s sale of Parsons Brinckerhoff will proceed unaffected by the merger talks.

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