Babcock set to bag VT Group with higher bid
ENGINEERING support firm Babcock International completed its long pursuit of sector rival VT Group with an offer worth £1.33bn last night.
Sources told City A.M. that VT would formally recommend the 735p-a-share offer this morning.
Babcock is understood to have raised its offer, made up of cash plus 0.701 Babcock shares per VT share, after identifying annual cost savings of around £50m from the merger – almost double the amount estimated before due diligence.
The tie-up comes three weeks after the pair opened talks. VT was initially hostile to Babcock’s approach, with VT chief executive Paul Lester dismissing a second offer of £1.25bn as “derisory” before shareholders persuaded him to open VT’s books.
Babcock chief executive Peter Rogers will create a FTSE 100 company through the merger with interests ranging from maintaining the Royal Navy’s submarines to servicing the Royal Air Force’s aeroplanes.
Last night, sources said the deal would go through in the summer after VT won approval from its shareholders and authorities in the UK and US gave it the green light.
One said: “This is good value for both sets of shareholders.”