The construction company Carillion last night delivered what it hopes will be a knockout bid for its smaller rival Mowlem by raising its cash and shares offer to £313m or 220p a share.
Carillion's increased offer compares with an initial bid worth 205p a share and is designed to thwart a possible competing bid from the rival construction company Balfour Beatty.
The raised offer, which is split 63 per cent in Carillion shares and 37 per cent cash, is recommended by the board of Mowlem and has the backing of Mowlem shareholders owning a little more than one-third of the company. Philip Rogerson, the chairman of Carillion, said: "I would hesitate to call it a knockout bid but we believe this is a very good offer which has strong shareholder support."
Carillion said it expected the enlarged group to achieve cost savings of £15m a year, one-third from closing one of the two head offices and rationalising the regional property portfolio. But Mr Rogerson said he envisaged few job losses and said the real benefit of the merger lay in putting together the two companies' expertise in running public-private partnership schemes.
After Carillion's initial bid, Balfour said it was considering making a counter-offer, although it has never named a price nor said it intends to bid.
Carillion has irrevocable undertakings to accept the offer from Schroders, Société Générale and Aberforth, who between them own 28.7 per cent of Mowlem, and a letter of intent from Morley Fund Management to vote its 5.8 per cent stake in favour. The offer is made up of 0.46 of a Carillion share and 82p in cash for each Mowlem share. The previous offer contained the same cash element but only 0.39 of a Carillion share.Reuse content