Mouchel Group Plc, a supplier of grit to London roads, fell the most since June 2002 when it first sold shares in London after rejecting revised proposals from builder Costain Group Plc and construction services company Interserve Plc.
“The Board believes that Interserve’s revised conditional proposal significantly undervalues the business and that Costain’s proposal has an unacceptably high level of execution risk to warrant further discussions,” Surrey, England-based Mouchel said today in a regulatory statement. “The board has decided it is not in shareholders’ interests to proceed with any further discussions with Interserve or Costain.”
Mouchel, whose earnings have deteriorated following cuts to public spending by the U.K. coalition government, said it continues to remain in an offer period and that business will be “challenging in the short term.”
The stock fell as much as 35 percent to 95.75 pence, the biggest one-day decline since June, 28, 2002. The decline gives the company a market value of 110 million pounds ($176 million). In a separate statement, Interserve said it had no plans to make an offer for Mouchel.
“Its very possible another offer might be made for Mouchel,” Andy Brown, an analyst at Panmure Gordon U.K. Ltd., said by phone today. “Its shares at one quid are certainly a better deal than at 155 pence.” Brown today downgraded its rating on Mouchel to ‘sell’ from ‘buy.’
In a separate statement, Mouchel reported revenue fell 13 percent to 270 million pounds in the six months ended Jan. 31 compared with the same period a year earlier. It had a pretax loss of 1.5 million pounds compared with a loss of 3.5 million pounds a year earlier.
Mouchel’s three largest shareholders are Schroders Plc, Prudential Plc and M&G Investments, according to Bloomberg data.