Bryant, which has by far the higher stock market valuation, is understood to have halted discussions because McAlpine chief executive Oliver Whitehead was likely to have become chief executive of the combined group, making the merger look like a reverse takeover.
Whitehead would have got the position because Bryant’s 58-year-old chief executive Andrew Mackenzie is due to retire in November and Bryant finance director Michael Chapman announced last September that he would resign once a replacement was found.
“Whitehead would have been the senior ongoing director and it would have looked like a reverse takeover, which would have been a problem for Mackenzie,” said a City source.
“Andrew has been with the company man and boy and I think he would have a problem with an outsider walking into his office and taking over the whole Bryant Group overnight,” said another source close to the company.
Analysts were less worried about Whitehead running the new group. “Whitehead is a highly rated chief executive, even though his background is mainly in contracting rather than housebuilding,” one said.
The two firms issued a joint statement on Monday saying their “preliminary discussions” had been terminated. However, the two could resume talks once their financial results have been announced in March, by which time Mackenzie is expected to have named his successor and appointed a new finance director. Mackenzie has brought in headhunter Russell Reynolds, but the company has a history of internal promotion.
The favourite for the chief executive role is technical services managing director Nick Smith. Mackenzie was unavailable for comment but Whitehead said the Bryant deal was not necessarily dead. He said: “The timing was not right. If we can get the thing back together, we will.”
One source suggested that the companies’ chairmen were still keen on the move. “Colin Hope of Bryant and Terence Harrison of McAlpine are old friends from the North-east. Once two chairmen have got an idea in their heads, it’s pretty hard to shift it,” he said.
Bryant is valued at £425m and McAlpine at £225m. The combined company would be more attractive to investors because of its size. However, it is unclear whether McAlpine would dispose of its contracting business if a deal went ahead. McAlpine has spoken to a number of companies since rejecting two approaches from Brunswick Developments last year.