Analysts says VT could return £230m to shareholders in attempt to beat off Babcock's takeover offer

VT Group is considering a cash payout to shareholders in a bid to fight off a takeover bid by rival Babcock International.

On Monday last week, support services firm Babcock tabled a surprise offer for VT, valuing the company at £1.2billion. This was rejected and later followed by an increased offer that was also turned down.

According to a report in the Sunday Times it is now understood that VT is considering putting the bid it made for Mouchel earlier in the month on the backburner in favour of returning funds to shareholders. Analysts have calculated that it could pay out about £230m, or 126p a share. VT shares closed last week at 648½p, up 140½p on the week.

A merger of Babcock and VT would create a giant services company that would be almost certain of going into the FTSE 100.

VT previously tried to buy Babcock four years ago.

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