Babcock in closing stage of due diligence on merger target VT

DEFENCE engineer Babcock is at an advanced stage of carrying out due diligence on rival VT Group after the companies entered into friendly merger talks a fortnight ago.

Babcock is understood to have identified cost savings well ahead of the £27m it estimated before VT allowed access to its projected profit and revenue figures.

Analysts have suggested the number could reach £50m, which would put pressure on Babcock to raise its offer towards the 750p mark demanded by management and some shareholders. The offer on the table before VT opened its doors was 685p to 715p per share depending on synergies.

Babcock has a “put up or shut up” deadline of 12 April to make a bid or walk away. Sources said a deal would probably come before Easter.