VT rejects new Babcock takeover bid

In its new bid, Babcock would have offered 27 to 33 per cent more for each share of VT Group. The share price was 537.5 pence at the close of business on 2 February, the day before Babcock’s approach.

The VT Group board claimed the transaction would have been a ‘retrograde’ step for the company and increase its reliance on MoD contracts, which will likely be reduced again with ongoing budget cuts. 

The support services firm is looking more towards outsourced procurement activities, which would be a conflict of interest for Babcock as it is a contractor to the MoD in the marine and defence estates.

In statements following the rejected bid, VT Group noted the transaction would also have put further strain on Babcock’s already leveraged balance sheet, which also remains exposed to pension liabilities of more than £2bn and a current net deficit of £287m.

VT Group is undergoing somewhat of a company makeover — re-identifying itself as a business less reliant on the defence sector. The company has openly expressed its interest in the takeover of infrastructure firm Mouchel, which operates road, rail and water networks.