Bidders line up for Mouchel takeover

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The Independent Online

Support services group Mouchel could become the focus of a takeover battle, after a slump in the company's value prompted rival approaches.

Mouchel's share price fell 15 per cent on Thursday after its lending banks called in Deloitte to scrutinise the books before committing to refinance its credit facilities.

The board said yesterday that the "significant fall" in its share price in recent weeks over concerns about its refinancing "has resulted in recent approaches to the company". There was no indication as to the identity of the potential bidders.

The news saw the company's shares rebound a third. Yet, the management added that it did not believe the approaches reflected the true value of the group.

Despite Barclays, Royal Bankof Scotland and Lloyds BankingGroup calling in Deloitte, Mouchel said it was confident its bank facilities would be refinanced by March.

Yet, it is "not complacent" and is exploring other funding strategies. These include plans to raise capital by selling off non-core businesses as well as potentially targeting a rights issue. The statement added: "We have also looked into alternative sources of funding and debt reduction."

The company had been hit as public sector clients had slashed spending and delayed contract decisions. It said yesterday that this trend was "still the case and we therefore remain cautious about the short term trends in some of our markets".

Since December 2007, the share price has crumbled almost 85 per cent. The market has been especially jittery about companies that rely on public sector contracts since the collapse of Rok and Connaught.

Mouchel, which will deliver £25min cost cuts by the end of the year,said the steps to manage the business in trying markets "are proving successful".