Costain approached the board of Mouchel on 2 December 2010 proposing a share exchange deal worth 105.8p per share to Mouchel shareholders – a premium of 87% to the closing Mouchel share price of 56.5p per share on 3 December.
The offer also represents a premium of nearly 30% to the average closing Mouchel share price of 81.7p for the period since Mouchel's preliminary results announcement on 28 October.
Costain proposed that Mouchel's shareholders would receive 48% of the enlarged issued share capital of Costain.
As previously reported, Mouchel’s board rejected the proposal on 6 December 2010 and there are currently no discussions taking place between Costain and Mouchel.
Mouchel, however, faces a debt burden of £109m and its banks have called in Deloittes to review the business before they will agree any refinancing.
According to Costain, the two companies “are highly complementary businesses” and a takeover would have significant benefits for both sets of shareholders.
Costain wants Mouchel’s design and consultancy expertise to put it in the front rank for multi-disciplinary projects. Chairman David Allvey said: "The board of Costain believes that there is a compelling strategic rationale for combining Costain and Mouchel. In particular, it would provide the enhanced critical mass required by blue-chip customers who are increasingly moving to larger, longer-term bundled or multi-disciplinary solutions.
"The board also believes that bringing together two of the UK's premium brands with major capabilities across consulting, construction and care, resulting in an order book of over £4 billion, would also create significant value for both sets of shareholders."