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Post  Admin on Thu Jan 27, 2011 12:37 am

Costain prepares new Mouchel bid

Construction firm Costain has raised the stakes in the battle for outsourcer Mouchel with a new takeover proposal worth around £175 million.

It is the second time that Costain has increased its offer price, but the company's hopes of securing a deal continue to be frustrated after Mouchel revealed it was also considering other takeover approaches.

Mouchel has so far refused to engage in talks with Costain after rejecting two previous offer proposals.

It said it was "actively reviewing" further recent approaches made since early December, while it also thrashes out a new financing deal for its debt pile - seen as key to its bid defence.

Shares in Mouchel raced ahead by another 23% on Friday as investors relished the prospect of a potential takeover tussle.

Costain's new all-share proposal marks a 45% hike on its first indicative offer, which valued Mouchel at around £118 million.

David Allvey, chairman of Maidenhead-based Costain, said he hoped it would "encourage Mouchel's board to engage with us without delay".

Costain's pursuit comes after Mouchel shares hit an all-time low of 56.5p in early December, down from a year high of 268p, amid concerns over Government spending cuts and as it holds talks over debt refinancing.

But Mouchel urged shareholders to take no action as it closes in on a deal with banks.

Mouchel said it had made "significant progress" in talks with lenders Barclays, Lloyds Banking Group and Royal Bank of Scotland and hoped to finalise new arrangements shortly.



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