LONDON (Reuters) - VT Group investors are urging the company to enter takeover talks with suitor Babcock International, with one major VT shareholder writing to the firm"s board calling on it to open its books.
"One or two investors have written letters to the effect that maybe VT should be opening their books," a top VT shareholder told Reuters on Wednesday on condition of anonymity.
"We"ve made it blatantly obvious that we would like them to enter into negotiations," the shareholder said, adding that a price of 800 pence a share "would be nice but I don"t think we"re going to get there."
VT, once a naval shipbuilder and now a support services company, snubbed approaches from Babcock twice last week and has set its sights on an 800 pence-per-share offer that would value the group at 1.44 billion pounds ($2.23 billion).
Analysts and shareholders believe somewhere between 725 and 775 pence a share is more realistic.
Babcock, which services the Royal Navy"s submarines, on Thursday increased its proposed bid to as much as 715 pence per VT share, paying with 0.701 of its own shares plus cash in an offer valuing VT at up to 1.29 billion pounds.
Before Babcock made its move, VT had raised its own previously rejected bid for Mouchel, boosting hopes it would clinch a 330 million pounds deal for the infrastructure support services group as part of moves to diversify beyond the defense industry.
UNDER PRESSURE
Two other VT shareholders told Reuters that VT is coming under growing pressure from investors to enter talks with Babcock. The company"s biggest shareholder Invesco declined to comment.
"I think there is increasing pressure coming from VT shareholders for them to open their books," said a shareholder in both VT and Babcock, adding that it was now up to the second tier of VT shareholders to put pressure on the board.
Angela Lascelles, joint managing director at OLIM Ltd, which holds 1.49 percent of VT shares, said "there is some pressure (on VT) but you don"t open your books until there is an acceptable offer on the table and we"re clearly not there yet."
Asked whether an offer around 750 pence would get VT to open its books, OLIM"s Lascelles said, "yes, I would think so."
"I think they"re going to open the books," said one major shareholder, adding that "somewhere between seven and eight pounds" would probably be enough for VT to talk.
"It"s a merger made in heaven, unless you happen to own a lot of Mouchel shares," he said referring to Schroders fund manager Andy Brough, who controls 8.8 percent of Babcock"s shares and a 12.6 percent stake in Mouchel, the largest institutional holding in both firms, and opposes Babcock"s pursuit of VT.
"It"s quite likely that Babcock would nudge the offer higher if they were given access to the books -- whether they should or not from the perspective of a Babcock shareholder is another matter," the joint VT-Babcock shareholder said.
Analysts at Numis have said VT should hold out for an offer of 775p a share, while Arbuthnot analyst David Brockton believes Babcock could stretch to 760 pence "in the absence of further synergy benefits."
Shares in VT were down 0.45 percent at 660.5 pence by 1532 GMT while Babcock was 1.0 percent weaker at 540 pence.
Britain"s Takeover Panel is this week expected to tell Babcock to make a formal offer for VT or walk away for six months following a request from management at the bid target.
For a Factbox on the two companies, double-click on
($1=.6473 pounds)
(Editing by Paul Hoskins and Mike Nesbit)
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