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Babcock given rough ride over proposed Avincis tie-up

Last updated: 22:19 25 Nov 2013 AEDT, First published: 23:19 25 Nov 2013 AEDT

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Confirmation that Babcock (LON:BAB) is in talks over a joint venture with helicopter group Avincis sent analysts rushing for the red pen to downgrade the engineering services specialist.

The FTSE 100 group is in talks to take a stake in the transport firm, but brokers failed to see the merits behind its plans to invest £1.5bn, the sum mentioned in reports over the weekend.

Numis Securities, Investec and Panmure Gordon all removed their ‘buy’ recommendations, predicting little upside for the share price from now on.

Investec said it would need more clarity about the deal to switch back to ‘buy’, while Panmure said the strong run from the share price meant a downgrade was inevitable “as concrete earnings upgrades are now required to further advance the shares from here in our view”.

Babcock International said this morning it is in exclusive discussions over a tie-up with Avincis, which provides medical emergency, civil protection, search and rescue, coast and city surveillance, fire-fighting and energy support services.

This initiative is part of its strategy to grow its leading engineering support services position in the UK and overseas.

Shares fell 3% to 1,285p. 

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