Costain has made a fresh bid worth more than £150 million for struggling outsourcing firm Mouchel as it today published a trading update statement that revealed its order book had shrunk.
The move comes after Mouchel last month rejected the engineering group’s initial £119m bid for the company because the board deemed the offer was ‘significantly undervaluing’ the firm.
The latest takeover proposal is 27.6 per cent higher than the previous approach, which would give Mouchel shareholders a 51.7 per cent stake in the enlarged company should a deal go ahead, Costain said.
Chairman David Allvey said there was “compelling strategic rationale for combining the two firms” - a merger would create a business with a combined order book worth more than £4 billion.
Mouchel, which develops infrastructure for councils and government agencies, has been hit by a drop in demand after the change of government in May as departments have reined in spending and postponed or scaled down projects.
Its share price plummeted at the beginning of December hitting an all-time low of 56.5 pence in early December – from a year high of 268 pence.
In a pre-close trading update issued separately today, Costain revealed its order book had fallen to £2.4 billion as of 31 December 2010, compared to £2.6 billion for the same period the year before.
However, the firm said it had entered 2011 with a “strong order book and a pipeline of opportunities”.
In a statement, Costain said its order book had benefited from a number of major contracts awards during the year including the Bond Street station upgrade, in joint venture, for London Underground, the cable tunnel infrastructure for National Grid and the Highways Agency Managed Motorway Framework.