Babcock makes £1.14bn move for rival VT

BABCOCK International has made a £1.14bn approach to buy defence services firm VT Group, potentially scuppering VT's own bid for infrastructure services firm Mouchel.

Babcock, which operates ship-building and nuclear power programmes, said VT had rejected an initial approach offering 633.9p per VT share, representing a premium of 24.8 per cent.

Babcock said it had sent a letter to VT outlining the terms of a potential deal on February 3, but VT had "declined to discuss this further with Babcock or to engage with a view to exploring terms which might be acceptable to them".

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The offer from Babcock, which wants to combine with VT to create an international engineering support services company, was made up of 245.5p in cash and 0.701 Babcock shares although part of the cash element comes from VT's own resources.

Earlier yesterday VT Group raised its own bid for Mouchel, boosting hopes it would clinch a 330m deal as part of moves to diversify beyond the defence industry.

"Babcock reserves the right to make an offer on less favourable terms than those set out in this announcement in the event that VT announces a firm intention to make an offer for Mouchel Group," Babcock said in a statement.

Last year VT sold its 45 per cent stake in shipbuilding consortium BVT Surface Fleet to BAE Systems for 346m, giving BAE total ownership of the venture.

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VT has secured a 35m contract to provide support to the RAF's fleet of Tucano training aircraft. VT will guarantee the availability of the Tucano fleet of over 50 aircraft. Most of the activity is based at RAF Linton-on-Ouse in North Yorkshire where Tucanos are used to train jet pilots before they progress onto the Hawk fast jet trainer.