Construction group Costain has decided to give up on its various attempts to acquire Mouchel, after being rejected for the third time on 29 March (see Mouchel rejects reduced Costain and Interserve offers). In a statement Costain said it “decided to withdraw its revised proposal” and now “has no intention of making an offer for Mouchel”, after Mouchel rejected Costain’s request to perform a further week’s due diligence. Mouchel of course said that it is not in its shareholder’s interests to proceed with any further discussions with Interserve or Costain, after having consulted with shareholders that own over 50% of Mouchel’s share capital. It declared that it “no longer remains in an offer period”. Investors it seems weren’t that happy with the news though, and lopped 13% off Mouchel’s share price.
We wonder how Mouchel’s rejections really are in the best interests of its long-suffering shareholders when they have seen their investment in the company fall 55% in the past year alone. As of 5 April, Mouchel trades at 82 pence – 50% lower than Costain’s 164 pence per share (pps) offer, and 39% lower than Interserve’s 135 pps offer. Let’s not forget that Mouchel also rejected a much higher 260 pps offer from erstwhile VT Group back in December 2009. So we wonder what it really would take for Mouchel’s management to give an offer serious consideration.
Mouchel said its "priority remains to enhance shareholder value". However it will have a lot of work to do to get its share price back up to previous highs – three years ago it traded at over £4 per share. And there is clearly something ‘under the covers’ that had prompted both the Interserve and Costain reduced offers. With Mouchel’s business still in decline, and more disposals and restructuring on the cards (see here) in 2011, we just wonder where this ‘value’ is going to come from.