VT rejects second offer from rival Babcock

The cash-and-shares approach from Babcock significantly undervalues VT and its prospects, the former Vosper Thornycroft business said.

It is the second rejection of the week after VT said on Monday it had turned down a proposal worth 1.1bn from Babcock, which employs around 17,000 people worldwide and generated revenues of almost 2bn last year. The support services firm also made two approaches to VT last year.

Southampton-based VT said: "The board of VT considers that the company will produce higher growth and better returns for shareholders as an independent business pursuing its support services growth strategy."

VT has takeover ambitions of its own after this week upping its bid for outsourcing and engineering firm Mouchel to 330m.

The company is on the hunt for acquisitions after building up a war chest of 500m, largely thanks to the 346m sale of its 45 per cent holding in BVT Surface Fleet naval shipbuilding to joint venture partner BAE Systems.

That move came as part of a planned exit from shipbuilding to focus on its services businesses, covering defence, communications and education and skills.

It also reduced the company's exposure to Ministry of Defence spending, which it believes could be susceptible to budget cutbacks following the election.