Contractor and defence specialist Babcock will buy service provider VT Group for £1.3bn, ending months of speculation over whether consultant Mouchel would be bought.
Both VT Group and Babcock specialise in defence, but VT Group had indicated it wanted to move out of this sector to concentrate on public sector work, and made an approach to buy consultant Mouchel to complete the transition.
However, Babcock launched a counter-bid for VT Group, which would further entrench the combined group in the defence sector.
VT chair Mike Jeffries said: “The VT Board believes that Babcock’s offer represents an attractive proposition for VT Shareholders both through the immediate offer premium and through the opportunity to benefit from the synergies available from combining our two businesses.”
VT Group seemed intent on buying Mouchel, and city gossip suggests Mouchel’s major shareholders were in principle in favour of a £330M deal.
However, VT Group’s shareholders clearly favoured the combination with Babcock - the two companies had been in merger speculation for the best part of a decade.
Mouchel is now unmolested, and its share price has stabilised around the 200p mark. Today’s news, which ends VT Group’s courting of Mouchel, has not affected Mouchel’s share price, which rose a fraction of a percent in early trading.
Babcock’s chairman Mike Turner, said: “The acquisition of such a high quality and complementary business is in line with our strategy to be the leading engineering support services company in the UK. We look forward to bringing the enhanced capabilities of the enlarged Babcock to new and existing customers”.