Page last updated at 17:14 GMT, Monday, 15 February 2010

Defence firm VT rejects bid approach from rival Babcock

Babcock is part of a consortium that makes the Coyote Tactical Support Vehicle
Both Babcock and VT supply the British armed forces

Defence and engineering group Babcock International has said it has made a £1.14bn takeover approach for rival VT Group, but that it has been rejected.

Babcock said in a statement that the board of VT "declined to enter into discussions".

The news comes four years after Babcock rejected a joint takeover approach from VT Group and BAE Systems.

VT Group is currently trying to buy infrastructure firm Mouchel and raised its bid for the firm on Monday.

Mouchel, which builds and operates road, rail and water networks, said it was considering a new offer of 0.579 VT shares for each Mouchel share, up from the 0.475 shares offered in December.

'Significant logic'

VT has yet to comment on Babcock's bid approach.

Both Babcock and VT are UK companies that supply the British armed forces.

Babcock said it "considers that a combination with VT has significant industrial and commercial logic, and would bring together two highly complementary businesses to create a large and focused international engineering support services company".

It added that "the enlarged group would be better placed to lead in complex bids, achieve greater work-share and deliver increased services and efficiencies for its customers".

For each VT share, Babcock is proposing to offer 245.5 pence in cash, plus 0.701 new Babcock shares.

Babcock says that this values each VT share at 633.9 pence, a premium of 24.8% to Friday's closing price.

Shares in VT ended Monday trading in London up 76 pence or 15% to 584p.

Babcock's share finished down 8.8% or 49 pence to 505p.



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