Costain launches takeover bid for Mouchel

Grant Prior 12 years ago

Costain has launched a £119m hostile takeover bid for consultant Mouchel.

The all-share deal has been rejected by Mouchel bosses but Costain’s board is determined to continue with its approach.

Costain confirmed in a Stock Exchange announcement this morning: “The Board of Costain believes that Mouchel and Costain are highly complementary businesses and that a combination would provide significant benefits for both sets of shareholders.”

Chairman David Allvey, said:  “The Board of Costain believes that there is a compelling strategic rationale for combining Costain and Mouchel.

“In particular, it would provide the enhanced critical mass required by blue-chip customers who are increasingly moving to larger, longer-term bundled or multi-disciplinary solutions.

“The Board also believes that bringing together two of the UK’s premium brands with major capabilities across consulting, construction and care, resulting in an order book of over £4 billion, would also create significant value for both sets of shareholders.”

CEO Andrew Wyllie said: “The door is open and remains open. One of the reasons for going public today is to broaden the debate but what we absolutely want to do is to get into a dialogue with them.

“We would hope to talk to their shareholders and we’ll see how it develops from there. One of the reasons for making it public is to give us the opportunity to do that,”

Mouchel has been struggling under the weight of its £109m debts leading to Deloitte being appointed last month to carry out a review of the business.

The firm’s share price also plummeted to a year low of 56.5p from a high of 268p. It currently stands at 73p.

The consultant confirmed earlier this month that it was the subject of takeover talks with Costain now revealed as the predator.

A Mouchel statement today said: “The Board of Mouchel confirms that, following consultation with its advisers, it rejected Costain’s proposal on the basis that it significantly undervalues the business.”

The rejected Costain deal would give each Mouchel share a nominal value of 105.8p with shareholders in the consultant owning 48% of the newly enlarged business.

Mouchel’s share price rose 26% to 92p in early trading this morning.

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