VT rejects increased Babcock offer

The parallel takeover battles between VT Group and Mouchel and Babcock and VT took a fresh twist this morning after VT rejected an increased offer from Babcock.

VT Group called the revised offer from Babcock “only a small improvement” on Monday’s offer.

The offer comes as VT is pursuing a takeover target of its own in the shape of consultant Mouchel.

Babcock’s offer of between 680p and 715p per share values VT at about £1.3bn, which is up on its previous offer of 642p per share.

In a statement to the Stock Exchange this morning VT Group said the offer would restrict its growth plans, increase its exposure to the MOD, which faces budget cuts, and put a strain on Babcock’s “already leveraged balance sheet”.

VT said: “The board of VT considers that the company will produce higher growth and better returns for shareholders as an independent business pursuing its support services growth strategy. Further, the acquisition of Mouchel is fully aligned to this strategy and will offer additional opportunities for enhanced returns.”

Arbuthnot analyst David Brockton said he was surprised a second offer had come so quickly from Babcock.

He said: “It shows they are serious and they would always have had to raise their initial offer but I’m surprised its come so soon and I’m surprised VT has rejected it in such an out-of-hand manner.”

In a move that further muddied the waters this week, it was reported that American defence giant Lockheed Martin may make a move for VT.

Last month Building reported that VT was waiting for Mouchel to show signs of financial weakness in order to strengthen its bargaining position after Mouchel rejected its offer of 260p per share before Christmas.

Last Friday VT upped its bid to 294p per share, shortly after Mouchel confirmed it had won £405m worth of work from the Highways Agency.

Mouchel said its board is considering the terms of the proposal and is consulting with the company's principal shareholders.