Mouchel refuses to rule out Costain's £170m bid

Mouchel left the deal-room door ajar for engineer Costain, which today came back with a third takeover bid for the motorway maintenance group, this time worth more than £170million.

Having swiftly rejected two previous offers, worth around £118 million and £150 million, Mouchel today said: "The board strongly advises shareholders to take no action. A further announcement will be made as appropriate."

It did, however, add that it was close to finalising a refinancing deal. Uncertainty over that plus a profits warning as it was hit by delayed contracts from Government and local councils saw shares plunge to an all-time low of 56.5p in December. Today Mouchel was up 24% or 28p to 141.75p.

The new Costain offer is made up of 0.6 new Costain shares plus 30p in cash for each Mouchel share. Costain's chairman David Allvey said: "We firmly believe that a combination of the two businesses is in the best interests of both sets of shareholders and would bring resolution to the issues Mouchel faces.

"As part of a strong Costain group with a well-capitalised balance sheet, Mouchel would be better placed to compete effectively for major contracts."