Babcock has confirmed it rejected a takeover approach from its smaller rival Serco in January.
Read more: Serco tried to merge with huge rival Babcock
Serco had proposed an “all-share combination” between the two industrials companies but Babcock’s board unanimously rejected it, the outsourcer said today.
Board members concluded that “a combination of the two companies had no strategic merit and was not in the best interests of Babcock’s shareholders, customers or wider stakeholders”.
Reports of the potential merger first emerged yesterday in the Sunday Times. If passed, the bid would have created a £4bn company.
Serco made a first approach late last year, the newspaper reported, after chairman Roy Gardner got in touch with his Babcock counterpart Mike Turner.
Turner rejected the offer out of hand before Serco returned with a more detailed bid on 23 January, which Babcock rejected.
The takeover target today dismissed the January offer as “an unsolicited and highly preliminary proposal”.
“No further proposal has been received,” Babcock added today.
Babcock, a major supplier to the Ministry of Defence, has seen its shares suffer over the last year, falling from 847p in June 2018 to close at 465p at the end of last week.
The outsourcer has vowed it will increase profit by three to four per cent in the next five years in a strategy it laid out to investors recently.
But it has battled an anonymous analyst’s gloomy notes as well.
A shadowy analyst outfit called Boatman Capital has called Babcock’s corporate structure “opaque” and “needlessly complex”.
But Babcock defended its corporate structure and dismissed the comments as a “malicious attack”.
It also said the analyst is an anonymous and unregistered entity.
“Whilst the minor allegations made are inaccurate and misleading, this is the second malicious attack by Boatman and we feel it is right to, once again, refute their allegations publicly as we are unable to engage with them directly,” Babcock said last month.