Babcock International, the warship builder and support services group, warned potential bidders yesterday not to put forward a low-ball offer for the group.
Last week, BAE Systems and VT Group admitted they were discussing putting together a joint offer but no approach has so far been made to the Babcock board.
Babcock said yesterday, as part of a scheduled trading update, that: "Babcock believes that such a bid risks undervaluing both our successful support services operations and the excellent long-term prospects of Rosyth. Babcock has not received any proposal from VT Group, BAE Systems or their advisers and shareholders are urged to take no action at this time."
A hostile bid is considered unlikely. Babcock shares edged down 0.75p to 326.5p, valuing the company at £683m. It said its order book stood at £2bn and "good momentum has been maintained across the business".
Analysts said Babcock believed that because its shipyard at Rosyth, in Scotland, had not yet signed a contract that it expects, to assemble two aircraft carriers for the Ministry of Defence, any offer would not reflect the longer-term value of this asset. In the trading update, Babcock said Rosyth "has been affected as anticipated by the current reduction in the order book".
The MoD has nominated Rosyth as the yard that will assemble the carriers, a deal that will also involve other companies. The order, when it comes, is reckoned to be worth some £4bn and Babcock's share would be about 20 per cent.
The BAE Systems-VT Group scheme would lead to the long-awaited consolidation of the UK's warship-building industry. BAE, which already owns yards on the Clyde and at Barrow, would take control of Babcock's Rosyth yard and VT's warship yard in Portsmouth. VT, meanwhile, would acquire Babcock's support services business.
Babcock has also been in industry discussions with warship builders about ways of cutting costs in the sector. The MoD has demanded that the process must be made more efficient. These talks have focused on forming partnerships or all putting their shipbuilding assets into a single new company.