British construction firm Carillion is proposing to pay shareholders of its takeover target Balfour Beatty an additional cash dividend of 8.5 pence per share and said that a merger would save the companies over £1.5 billion. 

Balfour Beatty has rejected two takeover proposals by Carillion which has until August 21 to make another final offer. 

The two construction-focused firms have a combined market capitalisation of £3 billion and Carillion said today the companies would benefit from streamlining parts of their businesses to save at least £175m a year. 

Carillion revealed details of its offer at the request of the UK Takeover Panel after the construction group held meetings with a number of Balfour Beatty's major shareholders. 

Carillion separately today posted a 3% rise in first-half underlying pretax profit to £75.9m on slightly lower revenue of £1.87 billion. 

It said it was still targeting revenue growth for the full year, for which its expectations were unchanged.