Midland construction giant Carillion – which built the Library of Birmingham – is in merger talks to create a £3 billion powerhouse.
Wolverhampton-based Carillion is in discussions with Balfour Beatty, which is struggling after sacking its chief executive more than two months ago, about a deal.
It would create an industry giant with flagship projects including London's Olympics Aquatics Centre and the redevelopment of Liverpool FC's Anfield stadium.
The pair said in a statement: "The boards of Carillion and Balfour Beatty believe that the merger of the two groups has the potential to create a market leading services, investments, and construction business of considerable depth and scale.
"Work is now underway to develop a strategy and outline business plan for a combined entity, underpinned by the evaluation of achievable synergies, future financing arrangements and a number of other essential supporting workstreams.
"In evaluating the merits of the merger, the two boards will, inter alia, wish to be satisfied that such a merger would lead to very significant value creation for the benefit of both sets of shareholders."
If successfully completed, a deal would put the merged group on course for entry into the FTSE-100 index.
Balfour, which has a market capitalisation of £1.6bn, has seen its shares perform poorly, while shares in Carillion, which is valued at £1.45bn, have risen by more than 13 per cent during the last 12 months.
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