Shares digital

One of the largest investors in International Nuclear Solutions (INS:AIM) has slated a £39.8 million offer by Babcock International (BAB) to gain full ownership of the nuclear decommissioning group.

The investor, who wished to remain anonymous, says they were ‘very surprised’ by a 58.8p per share offer from Babcock, ‘given that the company was offering 63p per share on the market last week’.

Babcock’s takeover of INS was blocked last August when two institutional investors – RAB Capital and Trafalgar Asset Management – accounting for 17% of shares refused to accept the 63p per share offer, saying it undervalued the business.

A new proposal was made on Tuesday with Babcock offering to buy INS’ operating subsidiary to gain full control. It needs 50% acceptance for the acquisition to proceed, which has already been satisfied by its current 68% stake. At least 75% of shareholder support is required to cancel INS’ Aim listing.

Commenting on the proposal, the unnamed investor said: ‘It is very odd that the board is recommending a lower offer when nuclear decommissioning markets are going up, not down. You have to question the independent valuation. The board is meant to be acting in the best interests of shareholders, which is more than just Babcock.’

Under takeover rules, Babcock cannot increase its original 63p per share takeover offer until February, when a six-month lock-in period expires. ‘It seems they are rushing through the new bid so they don’t have to pay more. Yet to actually pay less than offered a week ago opens the board up to litigation. It is something Aim should clamp down on.’

Neither Babcock nor INS could be reached for comment as Shares went to press.

Shares says: The new offer is unfair. Wait to see if the institutions demand better terms before deciding on the proposal.

by: Dan Coatsworth