VT ends pursuit of rival Mouchel

The outsourcing group's decision to walk away comes after its smaller rival refused to engage in talks about a proposal valuing it at 330m.

Southampton-based VT is facing a battle of its own after Babcock International made a new takeover approach for the former Vosper Thornycroft business.

VT, which is now focused on services covering defence, communications and education and skills, said Mouchel's refusal to hold talks and the interest of Babcock meant it would not make an offer for Mouchel.

The company said it continued to believe that a deal with the

engineering and roads specialist made sense. However takeover rules mean it will not be able to make an approach for six months, unless a new bidder enters the fray.

VT's withdrawal comes ahead of a 'put up or shut up' deadline set for Monday by the Takeover Panel.

Babcock was this week given a date of April 12 to reveal whether it intended to make a formal offer for VT.

The group, which employs around 17,000 people worldwide, also made two approaches to VT last year.

VT said the latest interest significantly undervalued its business and prospects and argued that Babcock exposure to Ministry of Defence spending made it susceptible to budget cutbacks following the General Election.