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Carillion is considering offering a 鈥渓ast-ditch sweetener鈥� to bring Balfour Beatty management back to the negotiating table over a proposed merger between the two construction giants.

According to a report in the Sunday Times yesterday, Carillion鈥檚 board and advisers are considering whether to offer Balfour Beatty鈥檚 investors a larger slice of the combined group to bring them back to the table, with Carillion鈥檚 chairman telling the newspaper the firm wants to 鈥渞e-engage鈥� with Balfour Beatty,鈥漛ut not at any price鈥�.

Under Carillion鈥檚 second merger proposal last week, which was rejected by Balfour Beatty, Balfour investors were offered 56.5% of the merged entity, which with around 拢14bn turnover would be far and away the UK鈥檚 largest contractor.

Carillion has just four days until the deadline of 21 August to make an offer and City sources told the Times Carillion was considering improving its offer to Balfour鈥檚 investors.

According to the Times, the sources cautioned, however, that there was no guarantee of a new offer, and that Carillion risked alienating its own investors if it were too generous.

Last week Carillion set out its detailed plans for a merged business combining the two firms, including 拢175m of annual cost savings, which, when capitalised, would add 拢1.5bn to the value of the company combined entity.

Carillion鈥檚 move was designed to tempt Balfour Beatty shareholders and force Balfour鈥檚 management back to the negotiating table after two of its merger offers have been rejected.

But Balfour Beatty responded with a statement saying Carillion鈥檚 calculation that a merger between the two firms could create 拢1.5bn of added value was 鈥渋ncorrect鈥� and the merger posed significant risks.

Balfour Beatty also questioned Carillion鈥檚 ability to manage the combined firm, which would have annual revenue of 拢14bn and around 80,000 employees, saying it would be 鈥渙f a significantly larger scale and diversity than the Carillion management team has previously managed鈥�.

Speaking to the Sunday Times Carillion chairman Philip Green said Carillion was 鈥渢rying hard to emphasise the benefits [of the merger] to shareholders鈥�.

鈥淥ur synergy numbers have been audited, and at 拢1.5bn it is virtually the same as the current market value of either company,鈥� he said.

Green added that while Balfour could 鈥渋n theory鈥� deliver some of those savings as an independent company, Carillion had a good track record. 鈥淭hey need three things: culture, management and systems. And we have them.鈥�

Green said Carillion wanted to retain Balfour Beatty鈥檚 consultant arm Parson Brinckerhoff - which Balfour is in the process of selling - because it accounted for so much of Balfour鈥檚 profit.

鈥淚f you take out Parsons Brinckerhoff and the private finance initiative assets, the rest of it [Balfour] is losing money,鈥� he said.

鈥淲e want them to re-engage, but not at any price.鈥�

This morning Carillion sought to clarify Green鈥檚 claims that the firm鈥檚 拢1.5bn synergy numbers had been 鈥渁udited鈥�, saying, in a statement to the City that while the synergy figure set out in its offer of 拢175m per year - from which the 拢1.5bn figure is calculated - 鈥渉as not been 鈥榓udited鈥� in the technical sense 鈥� an independent accounting firm has provided public assurance鈥� that the number was 鈥減roperly compiled鈥�.

鈥淚t is a very difficult decision, but even a small increase might be enough to bring Balfour back on board,鈥� said one source told the newspaper.