Construction firm Costain has upped the ante in its battle for outsourcer Mouchel as it revealed a third takeover proposal worth more than £170 million.
Costain’s higher approach – worth around 153.2p for each share – comes after Mouchel flatly rejected two previous moves over the past two months.
Friday’s all-share proposal marks a 45% hike on Costain’s first indicative offer, which valued Mouchel at around £118 million.
David Allvey, chairman of Maidenhead-based Costain, said he hoped it would “encourage Mouchel’s board to engage with us without delay”.
But the group’s plans could be scuppered as Mouchel is thought to be close to securing a refinancing that may help it fend off the unsolicited interest.
Costain’s pursuit comes after Mouchel shares hit an all-time low of 56.5p in early December – down from a year high of 268p – amid concerns over Government spending cuts and as it holds talks over the refinancing of its debt pile. Mouchel’s banks are said to be supportive of negotiations to extend borrowing terms for another three or four years.
The group has clients including Government agencies and councils across the UK, including Milton Keynes, Middlesbrough and Bath & North East Somerset.
However, Costain believes its proposed bid would create a stronger combined group with the scale and might to meet demand from customers for larger and longer-term bundled services.
A deal between the two would also “address the likely continuing constraints on the strategic development and growth of Mouchel following a debt refinancing,” said Costain.
Costain is focused on the infrastructure, environment and energy sectors. It said in a trading update on Friday that it ended 2010 on track with forecasts and has a forward order book worth £2.4 billion.