Mouchel, which acts as a consultant on infrastructure projects, rejected the offer yesterday afternoon, claiming that the bid significantly undervalued the business.
Costain said it would offer 0.5947 new shares for each Mouchel share. The offer values each Mouchel share at about 135p per share, based on Wednesday’s closing price.
Costain said Mouchel’s refusal “denies its shareholders the opportunity to have a major stake in a well capitalised, financially efficient, enlarged business, with a clear strategy for future profitable growth”.
In December, Mouchel rejected an approach from Costain that valued the firm at £119m, two weeks after Mouchel’s lenders hired Deloitte to review the business after peers Connaught and Rok fell into administration.
Execution Noble analyst David Brockton was not convinced by the new offer, saying in a note that the all-share bid represents a retrograde step for Mouchel shareholders. “Assuming Mouchel can successfully refinance its debt we would favour its prospects as a stand-alone entity versus the current revised offer from Costain,” he added.
Mouchel was courted by support services rival VT Group, which walked away last March after offering £330m.
Meanwhile, Costain said in a pre-close trading update that it has an order book of £2.4bn, compared with £2.6bn at the end of 2009. It said annual results in March are set to be in line with the board’s expectations.
Shares in Mouchel closed up 18.6 per cent at 127.75p yesterday. Costain shares lost 1.76 per cent yesterday to close at 223p.
COSTAIN hired Investec to fight its corner during the protracted battle to take over Mouchel, with head of investment banking David Currie leading the team.
Currie, a qualified engineer, has been with Investec since 1993. He has experience in private equity, flotations and M&A, and is also currently advising Irish convenience food maker Greencore as it works towards merging with Northern Foods.
He was part of the team advising PartyGaming, before Investec quit the job in 2005 amid reports about the questionable legality of online gambling in the US – a controversy that continues to rumble on.
He is not to be confused with David Currie, chief executive of private equity at Standard Life Investments.
Also working on the Investec team are Charles Batten and James Rudd. Batten joined the firm in 2009 from Dresdner Kleinwort, and recently worked as joint adviser to private equity firm Cinven during its takeover of water meter company Spice.
Rudd worked with KiFin during its £84.5m cash takeover bid for property company Minerva in 2009.
RBS Hoare Govett is advising Mouchel, led by Neil Collingridge, Sara Hale, Stephen Bowler and John MacGowan.