Engineer Costain Group PLC (LON:COST) said it approached Mouchel Group PLC (LON:MCHL) on December 2 with a view to making a recommended all-share offer but was rejected by the board of the outsourcing company.
It had proposed to pay 0.5135 new Costain shares for each Mouchel share which, based on the Costain closing price on 21 December, values each Mouchel ordinary share at approximately 105.8 pence.
This represents an 87.2 percent premium to Mouchel’s closing price on 3 December 2010 and a premium of 44.9 percent to Mouchel’s closing price on 21 December 2010.
Under the proposal Mouchel's shareholders would receive approximately 48 percent of the enlarged issued share capital of Costain. The proposed deal has the strong support of Costain's key lending banks.
Costain said Mouchel rejected the approach on 6 December 2010 and there are currently no discussions taking place between the companies.
Costain chairman David Allvey said: "The board of Costain believes that there is a compelling strategic rationale for combining Costain and Mouchel. (It) also believes that bringing together two of the UK's premium brands with major capabilities across consulting, construction and care, resulting in an order book of over £4 billion, would also create significant value for both sets of shareholders."
Mouchel is a consulting and business services group working with government agencies, local authorities, government-regulated industries and the private-sector in similar sectors to Costain.