Feb. 24 (Bloomberg) -- Mouchel Group Plc, a supplier of grit for London roads, rose the most in a month in London trading after saying it is in advanced talks about merging with an unidentified potential bidder.
In January, Mouchel said it was reviewing approaches from suitors after builder Costain Group Plc sweetened an offer for the company to about 172 million pounds ($278 million). Costain said today in a statement that it isn’t the party in the talks.
“The strategic logic of a combination of Mouchel and the preferred possible offeror would provide the best option to deliver value to shareholders,” Mouchel said in a regulatory statement today. A spokesman for Mouchel declined to comment on the identity of the potential bidder.
Mouchel gained 16.5 pence, or 12 percent, to 152.5 pence at the 4:30 p.m. close in London, the biggest one-day advance since Jan. 21. At that close the company is valued at 171 million pounds. The latest Costain bid for the Woking, England-based company values each Mouchel share at about 153.2 pence.
David Allvey, Costain’s chairman, indicated Mouchel was showing more willingness to enter talks after pressure from its biggest shareholder Schroders Plc, the Financial Times reported last week.
Mouchel’s three largest shareholders are Schroders, Prudential Plc and M&G Investments, according to Bloomberg data. Mouchel, whose earnings have deteriorated following cuts to public spending by the U.K. coalition government, has rejected two approaches from Costain.
There can be no certainty that an offer will be made, Mouchel said. Any offer remains subject to several pre-conditions, including the satisfactory completion of due diligence and financing which is likely to take a number of weeks, said the company.
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