viewBabcock International

Babcock rejects second approach from rival Serco

Babcock said it received an “unsolicited and highly preliminary proposal” from Serco for a potential all-share combination of the two companies.

Babcock said the deal was not in the best interests of its shareholders

Babcock International Group PLC (LON:BAB) has rejected another takeover approach from rival defence contractor Serco Group PLC (LON:SRP), saying a merger has “no strategic merit”.

Babcock said it received an “unsolicited and highly preliminary proposal” from Serco for a potential all-share combination of the two companies.

“The board of Babcock, together with its advisers, carefully considered the proposal and unanimously rejected it, having concluded that a combination of the two companies had no strategic merit and was not in the best interests of Babcock's shareholders, customers or wider stakeholders,” the company said.

It is the second time in the past year that Serco has approached Babcock over a potential £4bn deal.  

Serco’s interest in Babcock comes amid a difficult time for outsourcers with Carillion collapsing last January, Interserve entering administration in March and Capita undergoing a major overhaul after a series of profit warnings.

Last year Serco made pre-tax profit of £74mln, up from £10mln in 2017, on turnover down 4% to £2.8bn and said it expects the coming year to be “challenging”.

In comparison, Babcock posted a 39% drop in pre-tax profit to £235mln and a 4% decline in revenue to £4.5bn, adding that it predicts both measures to sink in the year ago.

Serco’s shares have recovered slightly since December to rise 40% over the past six months to 136p on Friday but are still well below a 2013 peak of 364p before the company came close to entering bankruptcy a year later.

Babcock’s shares slumped to 464p at the close of last week from a peak of almost 1,300p in 2014.

In morning trading, Babcock shares rose 3.5% to 480p while Serco shares were little changed.

Quick facts: Babcock International

Price: 221.6 GBX

Market: LSE
Market Cap: £1.12 billion

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events


The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...


Tellworth British Recovery & Growth Trust: to invest in 'best UK businesses...

Tellworth British Recovery & Growth Trust John Warren talks Proactive London's Katie Pilbeam through their portfolio. Warren explains that their 'targeted portfolio' is between 35 and 45 stocks across three key pillars to 'make investors a lot of money over the next 3-5 years. He explains...

21 minutes ago

2 min read