IT must be awfully hard for VT?Group to fend off Babcock, when it has been in hunter mode itself recently. It has been spinning a takeover of Mouchel with talk of synergies and scale, but balks when Babcock uses similar language.
VT’s trump card, a shareholder payout totalling as much as £230m or 126p a share, looks attractive. But investors should remember they would get some of that cash if Babcock’s bid was successful, along with shares in a FTSE 100 firm.
Babcock’s indicative offer – a maximum of 715p a share – is singing to some investors, but VT is right to hold out for more (although 800p is obviously ridiculous). VT management should bid them up and recommend the offer.