Rail firm split over £100m Babcock takeover

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The Independent Online

The chairman of rail engineering group Peterhouse has claimed that a last-ditch attempt by rival Babcock International to seize control of the firm is set to "backfire".

The chairman of rail engineering group Peterhouse has claimed that a last-ditch attempt by rival Babcock International to seize control of the firm is set to "backfire".

David Jackson will know tomorrow whether his attempt to fend off the £100m takeover approach is successful as the deadline for shareholder acceptances closes.

Babcock declared last week that it would make its offer unconditional if just 50.1 per cent of shareholders voted in favour of the bid.

Mr Jackson said: "This will backfire. The move hasn't been at all well received."

Around 47 per cent of shareholders have backed the bid so far. But the approach has split some of Peterhouse's biggest investors. The largest, Schroder, with 12 per cent, is supportive of Babcock's offer. But M&G, number three on the register, has declared that it is supporting Mr Jackson. "There is very little to commend to Babcock's offer," an M&G source said.

The bid has also divided Peterhouse's board. Mr Jackson and the company's corporate development director, Simon Foster, believe that Babcock's offer undervalues the company. But the six other members of Peterhouse's board have recommended the offer to shareholders.

Mr Jackson said that if he fends off Babcock's offer then he expects the rest of his board to resign: "I have a contingency plan. I will become chief executive and I have a non-executive chairman who will come in."

Peter Rogers, the chief executive of Babcock, said he "felt confident" that he would secure shareholder backing for his bid.

Yorkshire-based Peterhouse holds a number of rail engineering contracts, mainly in the north. If Babcock wins control then it plans to grow this business by bidding for new contracts with Network Rail. Peterhouse also has a business maintaining masts for mobile phone companies.

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