Highways wins strengthen Mouchel's hand in VT takeover battle

Mouchel has boosted its chances of fending off a takeover bid from VT Group by bagging two major Highways Agency jobs, Building has learned.

According to sources close to the situation, Enterprisemouchel, a joint venture between Mouchel and contractor Enterprise, has won two managing agent contracts (MAC); Area 1, covering Cornwall and Devon, and Area 13 which covers Cumbria, Lancashire and North Yorkshire.

Together the contracts have a value of £405m, with both starting this year and finishing mid-2015. A formal announcement is expected later this month.

The wins will be a blow to VT’s ambitions of taking over Mouchel, which has been waiting for signs of financial weakness at the consultant in order to strengthen its bargaining position.

Mouchel rebuffed an offer of 260p per share before Christmas and last month Building reported that VT had put its bid on ice until there was greater clarity surrounding Mouchel’s debt position.

On 1 February Mouchel said its lenders had been forced to change the terms of its £190m credit facility to avoid a breach of its banking covenants.

The wins may not be enough to derail the bid however. Earlier this week, sources close to VT Group said it was “absolutely intent” on buying Mouchel. According to the Takeover Panel, VT has until 8 March to either make a renewed offer or walk away.

Mouchel is due to update the City on Thursday and the contract wins will provide a much needed cash boost to the firm, which is nearing the limit of its credit facility due to poor trading in Dubai and the rail sector.

Both jobs were hotly contested, with Amey, Atkins and Carillion losing out on Area 1, while Amey, Balfour Beatty and Carillion also had bids in for Area 13.

Meanwhile, the Highways Agency has also awarded the£150m Area 14 contract, covering Durham, Northumberland, North Yorkshire and Tyne and Wear to the Aone+ consortium made up of Costain, Colas and Halcrow.

Atkins, Scott Wilson and Balfour Beatty lost out on the work, which starts in summer 2010 and runs until mid 2015.