VT mulls £233m payout to block Babcock deal

THE takeover battle between shipbuilder Babcock and services company VT Group has taken a twist after one of VT’s largest shareholders urged the board to open its books.

Fund manager Tim Steer of Artemis said chief executive Paul Lester should cooperate with Babcock to encourage the larger firm to increase its £1.25bn indicative offer.

Steer, who owns five per cent of VT’s shares and also has shares in Babcock, said: “If they want to do the best job by their shareholders then they are more likely to get a better offer if they let them see the cost savings.”

Babcock has already identified £27m in cost savings from a merger. Analysts believe the figure would need to approach £45m to justify a raised offer from the predator.

The intervention comes as Lester considers making a bumper payout to shareholders to fend off Babcock. VT may distribute £233m sitting on its books as a special dividend worth 126p per share, a move that would scupper Babcock’s approach as the cash pile was to be used as a component of Babcock’s offer. Sources close to VT maintained the firm would still have the financing power to pursue its £330m chase of rival Mouchel.