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Mouchel secures bank finance as it battles to fend off hostile takeovers

Consultant Mouchel this week announced it had agreed a £170M deal with its banks to take it through to 31 March 2014.

The announcement comes as the firm attempts to fight off takeover bids from several contractors. Costain has made three attempts to buy the firm over the past two months and now Carillion, Balfour Beatty and Capita are understood to be planning bids.

Contractor Costain last week upped the ante in its battle for consultant Mouchel with a third cash and shares bid worth more than £170M (News last week).

Costain chairman David Allvey said he hoped it would “encourage Mouchel’s board to engage with us without delay”.

Mouchel’s board urged its shareholders to ignore the approach ahead of the refinancing deal, claiming other firms were also expressing an interest in the consultant.

Mouchel chief executive Richard Cuthbert this week said the deal with the banks signalled an “important turning point” for the firm.

“It provides the group with stability and ensures that we can continue to compete successfully in our chosen markets,” he said.

“Although we are still operating in challenging conditions, the fundamentals of our business and long-term opportunities for the group remain strong.”

Richard Cuthbert, Mouchel

“Although we are still operating in challenging conditions, the fundamentals of our business and long-term opportunities for the group remain strong.”

But analysts were sceptical. “An offer of cash and Costain paper is better than Mouchel paper,” said Arden Partners analyst Geoff Allum.

It is understood that shareholders would like the company to be sold, with the price unlikely to reach the £3 per share offered by VT Group last year.

Analysts fear that if Costain walks away from the deal the shares will plummet back to the 50p they were trading at before Costain’s approach.

Costain’s higher approach – worth around 153.2p for each Mouchel share – comes after the consultant rejected two previous moves over the past two months.

Last week’s bid marked a 45% hike on Costain’s first indicative offer, and values Mouchel at around £118M.

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