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Mouchel fails to attract buy-out bids

Interserve and Costain showed no sign of re-launching their Mouchel takeover bids this week, despite the firm confirming it is open to “serious” acquisition approaches and a dramatic fall in its shareprice.

Takeover talk began last Thursday, when chief executive Richard Cuthbert resigned and the company issued a profit warning following an external £4.3 million actuarial error.

Mouchel’s finance director Rod Harris - its third finance director in 13 months - also reduced the firm’s profit forecast by about the same amount on the back of reviewed contract risks and project claims, taking the shortfall expected in the end-of-year results in a fortnight’s time to around £8.6m.

Mouchel shares dropped 37 per cent from 31p to 19.5p the same day, taking the market cap - the value of the company in total shares - down to £21.9m.

By Monday, the share price had slumped to 16.5p, taking the market cap to £18.6m. In February this year, the firm was trading at 154p per share.

Both Costain and Interserve placed £175m bids for the company back then, but reduced them after going through the firm’s books.

At the start of 2010, VT Group offered 294p per share for Mouchel - valuing the company at £329m. VT Group was then acquired by Babcock.

Mr Cuthbert told Construction News in June that the company would prove its decision to reject the Costain and Interserve bids had been justified. This week he said: “I’m afraid I’m in ‘no comment’ territory just now.”

A Mouchel spokesman told CN that “the board will consider anything serious” when it comes to takeover offers.

A spokesman for Costain insisted there was “nothing to say” about Mouchel. Interserve said its strategy was centred on organic growth, adding “at this point we have no plans to make any approach for Mouchel”.

Names of potential bidders discussed by some in the City included Costain, Interserve and Balfour Beatty. Carillion, which Mouchel is in joint venture with for the £2 billion Sheffield Highways PFI contract, is thought to be less likely, as it is focused on the £300m Eaga integration.

One analyst suggested CH2M Hill - the US firm that recently bought Halcrow for £124m - could be interested.

But analysts also suggested that the latest in a run of negative announcements surrounding Mouchel could raise questions over staff and contract retention.

They also questioned who might be willing to become the new CEO, either to “tidy up” the firm or negotiate a sale.

May Gurney chief executive Philip Fellowes-Prynne, said: “Richard Cuthbert has been around for a number of years, at Atkins and before; he knows a lot about the industry and it’s a shame when we lose people like that.

“It is just a bit frustrating for the marketplace because we have to yet again explain ourselves as an industry. There’s a period of reflection in Mouchel at the moment, I’d imagine.”

Another industry source said: “It was inevitable that Richard Cuthbert would have to leave.”

Lenders Lloyds, Barclays and RBS have hired KPMG to assess Mouchel’s position. Chairman Bo Lerenius will become executive chairman until a new chief executive has been appointed.


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