VT has already knocked back two approaches from Babcock, the most recent of which valued VT at between 885p and 715p per share depending on synergies. The offer equates to £1.25bn at the midpoint.
Investors said Babcock now recognised an improved offer would be the only way to force VT boss Paul Lester to open the company’s books for due diligence.
One shareholder said: “They understand that they have a window of opportunity ahead of them here. They are in a position where the shareholder pressure has been building and that will not last. It will dissipate naturally and they understand they have to move sooner rather than later.”
Another investor with stakes in both VT and Babcock said: “It wouldn’t surprise me at all if Babcock ended up offering a slightly higher payment in return for access to the books. That doesn’t mean they’re right to, because the top end of the offer on the table is already a fair price for VT.”
A handful suggested Babcock would come back with a fresh approach within a week rather than waiting for the Takeover Panel deadline of 12 April.
Lester says the board has the support of its major shareholders in withholding access to VT’s books. Although some invstors want 750p, it is unlikely an improved offer would come near that figure.