Contractor Costain has confirmed that it has launched a £119M hostile takeover bid for consultant Mouchel
The all-share deal has been rejected by Mouchel bosses but Costain’s board is determined to continue with its approach.
Costain confirmed it made its first approach on 2 December in a London Stock Exchange announcement this morning.
”The board of Costain believes that Mouchel and Costain are highly complementary businesses and that a combination would provide significant benefits for both sets of shareholders,” said the statement.
Contractor Costain unveiled an ambitious strategy to expand significantly in consultancy and engineering design in March. The move, to allow the firm to offer clients the “full life cycle” of services, was to be fuelled by acquistional and organic growth.
It is understood the firm was one of several interested in buying Scott Wilson, before eventual buyer URS and CH2M Hill got locked in a bidding war.
Mouchel admitted on 6 Decemeber that it was fighting one or more takeover bids, driven by the recent collapse in its share price.
In a trading statement to the London Stock Exchange, the firm confirmed that preliminary approaches have been made but that it did not believe they reflect the true value of the firm.
It is the second time this year the firm has faced a hostile takeover. In March it finally saw off the advances of VT Group after three months of speculation over the future the consultant. The 12,000-strong VT Group headed by chairman and former Atkins boss Mike Jeffries and chief executive and ex-Balfour Beatty group MD Paul Lester offered 260p per share for Mouchel in December last year.
But recent collapses in its share price have prompted renewed interest. Its shares have been trading as low as 53.25p, down on a year high of 285.25p. As recently as October shares were trading at 150p or more.
Costain’s offer, made on 2 December, comprised 0.5135 Costain shares for each Mouchel share. Based on the closing price per Costain share of 206p on 21 December 2010, the proposal curretnly values each Mouchel ordinary share at approximately 105.8p.
The proposal was rejected by the Mouchel board on 6 December and there are currently no discussions taking place between Costain and Mouchel.