City analysts say VT Group’s takeover bid for Mouchel looks dead in the water after support services firm Babcock tabled a surprise offer for VT on Monday
The offer, which valued VT at about £1.2bn at Monday’s share price, came 90 minutes after VT confirmed it had made a revised bid of 294p a share for services engineer Mouchel, after a proposal in December of 260p was rebuffed as too low.
Analysts say the stronger logic of a tie-up between Babcock and VT makes it a more attractive deal for shareholders. Both work in the defence facilities management market.
However, the Babcock bid was itself thrown into confusion on Tuesday following reports that US defence giant Lockheed Martin may mount a rival bid for VT.
VT shares rose 17% from 490p to 591p after the Babcock announcement while Mouchel shares dropped 27% to 203p before recovering slightly.
This presents a more compelling combination than VT’s bid for Mouchel
David Brockton, Arbuthnot
David Brockton, analyst at Arbuthnot Securities, said: “This approach appears to present a more compelling combination than VT’s bid for Mouchel. The deal also appears to be sensibly priced. Even if it’s not successful, it still looks set to hinder VT’s approach for Mouchel.”
Another analyst said: “You wouldn’t bet against Babcock getting its way. It has a good track record with acquisitions and has gone hostile twice before, succeeding both times.”
He added: “The other cunning part of the deal is that Babcock would return a lot of VT cash to shareholders that it would have spent buying Mouchel.”
Last month Building reported that VT, formerly known as Vosper Thornycroft, had put its bid for Mouchel on ice until there was clarity over its debt position. One analyst said: “This could open Mouchel up to another bid or help it secure independence.”