Carillion is hoping the deal will bring Balfour bosses back to the negotiating table after two previous bids were rejected.

The improved deal would give Balfour Beatty a 58.268% share of any merged business – up from the original offer of 56.5%.

Balfour shareholders would also receive a cash dividend of £59m.

Carillion claim the offer represents a 36% premium to the company’s current share price and values Balfour Beatty at £2,086m.

Carillion is also hoping that Balfour will request an extension of Thursday’s current deadline for any takeover.

Philip Green, Chairman of Carillion said “Given the scale of the prize for shareholders of both Balfour Beatty and Carillion from a merger of the two companies, the Board of Carillion remains committed to moving forward in a constructive and collaborative way with the Board and management of Balfour Beatty to create a world-class business and very significant value for the shareholders of both companies”.

Carillion said the cost base of a combined group could be reduced by £175m and that the sell-off of Parsons Brinckerhoff would be cancelled.

It added: “Carillion has repeated to Balfour Beatty that it is willing to allow it to continue with its Parsons Brinckerhoff auction process, and to enter into a contract for a sale of Parsons Brinckerhoff subject to shareholder approval.

“However, should the merger proceed, Carillion would expect the disposal of Parsons Brinckerhoff not to be completed.

“Carillion is willing to reimburse the remaining Parsons Brinckerhoff bidders’ reasonable costs (up to £10 million in aggregate) from the date that discussions with Balfour Beatty resume, in the event that the merger goes ahead and Parsons Brinckerhoff is not sold.”

In response Balfour said: “The Board of Balfour Beatty will consider this announcement by Carillion and will make a further announcement in due course.”