VT Group plans a fender payout to frustrate Babcock International bid

Dominic OConnell, Business Editor & , : {}

VT GROUP is deliberation a in advance plan to have a fender payout to shareholders to shun the clutches of opposition Babcock International.

Babcock, a counterclaim and engineering group, dumbfounded the City last week with a �1.25 billion demonstrative suggest for VT, a support-services company. The ensue was in a huff rejected, with VT observant it was an try to get the association on the cheap.

Babcocks move interrupted VTs own takeover battle. It not long ago done a grave bid for Mouchel, the engineering and roads group.

It is right away accepted that VT is deliberation putting the Mouchel bid on the backburner in foster of returning supports to shareholders.

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Analysts have distributed that it could compensate out about �230m, or 126p a share. VT shares sealed last week at 648p, up 140p on the week.

Bankers contend the intrigue would not meant VT carrying to desert the office of Mouchel. It could take on some-more borrowing to go ahead, they said. VT declined to comment.

A partnership of Babcock and VT would emanate a hulk services association that would be roughly sure of going in to the FTSE 100. Babcock maintains 3 of Britains naval dockyards and has operations in arch power, rail and engineering.

VT give up shipbuilding last year, when it sole the yards to BAE Systems, in the routine generating the money raise that it could make use of to buy Mouchel or, now, lapse to shareholders. The organisation is still a big retailer to the Ministry of Defence and alternative supervision departments.

VT attempted to buy Babcock 4 years ago, putting together a break-up bid with BAE Systems. Babcock, led by arch senior physical education instructor Peter Rogers, managed to quarrel it off.

Investment institutions are separate over the Babcock approach, with a little observant it is overpaying and others pulling for a discerning enlarge in the suggest to lift the day.

Babcock increasing the demonstrative suggest last week to 715p a share, valuing VT at �1.25 billion. If they can get to 750p, VT will have to open the books, pronounced one account manager.

Sources at Babcock pronounced their association would not ensue but being means to control full due diligence. They pronounced VTs long-term in isolation financial beginning contracts indispensable to be complicated carefully.