Several investors told City A.M. they could not understand the reluctance of chief executive Paul Lester to discuss the raised approach, which values VT at 685p to 715p per share depending on due diligence.
One British fund manager said he would settle for 730p per share, well below the level the board wants. He said: “People have been talking about this deal for ages. Paul can hardly say the strategy’s wrong because he’s said it’s right in the past.”
A New York-based investor said at 715p per share the valuation was already “full”. He added: “I’m extraordinarily frustrated. There’s a very large premium being offered and what they’re doing is absurd.”
Lester has called Babcock’s offer “unacceptable” and says he has the support of major shareholders in standing firm until a more attractive approach arrives. Babcock insists it needs to look at VT’s books to assess potential cost savings before it can offer more.
Invesco Perpetual, VT’s biggest shareholder, is known to back Lester. However, it is understood to be increasingly isolated as others such as Artemis encourage friendly talks.
Meanwhile, VT and Babcock are in a tug-of-war over the Takeover Panel’s “put up or shut up” deadline for a formal merger offer.
VT has been demanding an 8 March cut-off point to coincide with its last chance to seal a £330m takeover of smaller rival Mouchel. Babcock argues it needs longer if it is to put together a fresh bid.
VT’s Mouchel deadline is now likely to be pushed back to the week after Easter to coincide with a “put up or shut up” date for Babcock.