Balfour Beatty has confirmed that it has terminated £3bn merger talks with fellow construction firm Carillion after a disagreement over the terms of the deal.
Just before the market open Balfour Beatty said in a statement that it had put an end to merger talks with Carillion, despite only confirming the discussions less than a week ago.
Balfour Beatty shares fell by over 6% on market open to just under 240.00p.
"The termination of discussions follows Carillion's wholly unexpected decision to only progress the possible merger in the event that [construction management organisation] Parsons Brinckerhoff remained part of the potential combined entity," said Balfour Beatty in a statement.
"This change is contrary to the basis upon which the Balfour Beatty Board agreed to engage in preliminary discussions. It is also contrary to the joint announcement released on 24 July 2014 which confirmed that the sale of Parsons Brinckerhoff would be unaffected by the merger discussions and also a presentation to Balfour Beatty's Board by Carillion on 28 July 2014. This change in the proposed terms is not acceptable to the Board of Balfour Beatty."
Both companies have been working on large projects in recent times. Carillion has been working alongside the government to roll out broadband to 33 local authority regions across the UK, costing approximately £500m (€632m, $849m).
Balfour Beatty has been working on transforming London's iconic Olympic Stadium into the new home of Premier League football club West Ham United.
Balfour Beatty said it will proceed in accordance with its own business plan, "including the competitive sale process of Parsons Brinckerhoff currently well underway. It will also continue to actively progress its search for a group CEO."
In May, the construction giant said that its chief executive officer Andrew McNaughton was stepping down with immediate effect; the announcement followed an expected £30m shortfall in its UK business in 2014.