Mouchel board turns down Costain's bid approach

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The construction group Costain is looking to go directly to Mouchel's shareholders after the struggling services group rebuffed a £119m all-share approach earlier this month.

Costain's 105.8p per-share offer failed to win the backing of the Mouchel board, which said the proposal "significantly" undervalued the business. Costain's chief executive, Andrew Wyllie, said that, by going public, the construction group hoped to talk to Mouchel's shareholders and "we'll see how it develops from there".

The bid rounds off a turbulent few months for Mouchel, which is heavily exposed to the Government's spending cuts via its work for local authorities. The fiscal squeeze caused Mouchel to warn on profits earlier in the year and the company, whose Middle Eastern activities were hit by the Dubai debt crisis in 2009, went on to post an annual loss in October.

Earlier this month, it confirmed that its lending banks had appointed the accountancy firm Deloitte to conduct "a limited scope review" of its business. It added that refinancing was expected to be completed by the time of its half-yearly results in March.