British construction firm Costain has made an improved takeover approach worth around £172 million pounds for struggling business services group Mouchel.
The proposal comprises 0.5531 Costain shares and 30 pence in cash for each Mouchel share which, based on Costain's closing share price of 222.75 pence on Thursday, values each Mouchel share at around 153.2 pence.
Earlier this month Mouchel rejected an approach from Costain worth about £148m, saying the offer significantly undervalued the company.
"The strategic rationale for a combination has been widely supported and following extensive discussions with both sets of shareholders we have now significantly enhanced our proposal," said Costain Chairman David Allvey.
"Having made our first approach to Mouchel seven weeks ago and as one of a number of options to deliver our strategy, we believe that our revised proposal is attractive to both sets of shareholders and should now encourage Mouchel's board to engage with us without delay."
Mouchel, whose operations range from highway maintenance to consulting for local authorities, has been hit hard by government cutbacks and has embarked on a strategic review after warning it may need fresh funds if it fails to reach a refinancing deal with its banks.
Shares in Mouchel, which have risen by more than 50 per cent in the last month, closed at 113.75 pence on Thursday, valuing the business at around £133m
City A.M. Reporter