18 Feb 10. VT Group on Thursday rejected a revised cash-and-shares offer from Babcock International, calling the proposed tie-up with its rival “strategically unsound” for its shareholders. The higher offer values VT at between 680p and 715p a share, comprising 0.701 Babcock shares and the remainder in cash. Babcock’s original proposal, made earlier in the week, offered 633.9p in cash and shares for VT. A price of 700p, the mid-range of the latest approach, would value VT at £1.26bn, higher than the £1.14bn cash and shares proposal revealed on Monday. But the VT board unanimously rejected the revised proposal, saying that it would reverse the company’s strategy to reduce its exposure to government contracts which it believes are likely to shrink after the election. “Babcock’s proposal would have resulted in VT shareholders having a material exposure to the enlarged group. The board of VT maintains that Babcock’s rationale for a combination of the two businesses is strategically unsound.” It added that growth in the enlarged group would be restricted by a possible conflict of interest that would prevent it from tendering for potential MoD procurement contracts, an area of business it expected to grow. It said a standalone VT would be well positioned to benefit from this potential growth area. VT also said that a big portion of the cash element of Babcock’s original offer included the proceeds of the sale by VT of its shipbuilding business to BAE Systems last year – money that already belongs to VT. VT shares opened 40½p or 6.5 per cent higher on Thursday at 662p. Babcock shares, meanwhile, fell 15½p or 2.7 per cent to 550½p. Paul Lester, VT’s combative chief executive, met leading shareholders on Wednesday to garner support for his company’s independence. He has come out fighting, not only dismissing the level of the original offer but also criticising its industrial logic and arguing that VT’s own offer for smaller rival Mouchel makes more sense. (Source: FT.com)
17 Feb 10. Lockheed Martin may fly to the defence of VT. It has been billed as the battle of the middleweights — a dogfight involving two British defence contractors with ambitions to fly into the FTSE 100 — but the hostile takeover approach for VT Group from Babcock International to create a £2.3bn support services powerhouse could yet be a broken up by Lockheed Martin, a true heavyweight of the defence industry. The American company could be lined up as a potential preferred “white knight” bidder for VT in its attempt to see off the unwanted advances of Babcock. Although it is understood that no approach has been made by Lockheed, it is known to have considered a move for VT in the past. (See: BATTLESPACE ALERT Vol.12 ISSUE 08, 16 February 2009, BABCOCK WEIGHS IN WITH BID FOR VT) (Source: The Times)
17 Feb 10. Babcock International is poised to raise its offer for VT Group to more than £1.2bn in a bold attempt to hustle its support services rival to the negotiation table. The fresh strike, which could be made on Thursday, will test the defences of VT. It comes some 48 hours after Babcock revealed it had approached its rival about a deal. VT on Monday attacked that approach from the defence and engineering group as “totally inadequate” and “strategically unsound”. Babcock’s new proposal, which would again be indicative and conditional on gaining access to VT’s books, is expected to be pitched at between 685p and 715p a share. At 700p, it would value VT at £1.26bn, higher than the £1.14bn cash and shares proposal revealed on Monday. Babcock declined to comment. Babcock will hope its lightning strike will be enough to put pressure on Paul
Lester, VT’s combative chief executive, to come to the table. Analysts and some investors have since Monday estimated Babcock would need to offer more than 700p a share. Its original proposal offered 633.9p a VT share. Investors have also raised concerns about the fact that a big portion of the cash element of Babcock’s origin