2:28pm Thursday 25th February 2010
BOTLEY-BASED VT Group could invite a takeover bid from its American partner, Lockheed Martin, in order to escape the clutches of British rival, Babcock International.
The former shipbuilder has now rejected three offers from Babcock and the battle has become increasingly ill-tempered.
It has been reported that one more bid from Babcock might be enough to trigger an approach to the American defence giant.
VT and Lockheed are already partners in a £6bn deal with the MoD to train pilots.
Reports also suggest that VT would only be willing to open its books to Babcock if the cash and shares bid were to be increased from 700p to between 750p and 800p, raising the total bid value to £1.44bn.
Last week, VT rejected a £1.1bn offer and then an improved £1.2bn bid from Babcock.
VT described such a merger as “strategically unsound” with Babcock exposed to pension liabilities of more than £2bn and a current net deficit of £287m.”
Defending its position, VT said it would produce higher growth and better returns for shareholders as an independent business.
Any deal with Babcock, which has a heavy defence services portfolio, would also undermine VT’s efforts to reduce its reliance on this sector, which continues to be in the firing line when it comes to Government spending cuts.
Meanwhile, it has also been reported that the VT Group is considering offering £233m in special dividends worth 126p to shareholders.
It is one of the options the board is looking at following the rejection of Babcock’s second takeover approach. It has been reported that the dividend would be funded by the net proceeds of the sale of the VT Group’s BVT shipbuilding business to BAE systems last year.
Paul Lester, VT’s £1m-a-year chief executive, had wanted to press ahead with takeover plans of his own, using that money to buy rival, Mouchel, for £330m. He has described the latest Babcock offer as “unacceptable” and VT’s board was due to meet to discuss its strategy this week.
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