Babcock shares rally as it snubs Serco takeover

DEFENCE giant Babcock is sailing higher after revealing it rebuffed two takeover attempts by Serco, the outsourcer run by Winston Churchill’s grandson.

Serco’s chief executive Rupert Soames last suggested a merger with Babcock on January 23, the company said.

But the board of Babcock, which has worked on all of the UK’s nuclear submarines, unanimously rejected the offer.

They concluded ‘that a combination of the two companies had no strategic merit and was not in the best interests of Babcock’s shareholders, customers or wider stakeholders’, the company said in a statement.

Shares in the company were trading at around 541p when Serco made its approach in January. They had been pressured down by a report from anonymous research group Boatman Capital in November, which criticised the company’s deal-making and raised concerns over its financial health.

Babcock waved the report away as ‘false and malicious’, but Boatman released yet another report lambasting Babcock’s structure in May.

The FTSE250 firm crept up 1.5pc, or 6.8p, to 471.4p yesterday, as investors hoped another bidder might rear its head, but the shares are still down 42.5pc from a year ago.

Serco, meanwhile, which sources have said is still hungry for a deal, edged up 0.6pc, or 0.8p, to 136.9p.

Jobs recruiter Staffline wasn’t looking quite so perky, as it conceded it would have to double the amount of money it was putting aside to deal with minimum wage issues.

The firm, which matches its clients looking for work with vacancies in businesses from Tesco to Hotel Chocolat, discovered that it hadn’t been paying some of its workers in food factories enough money.

It initially set aside £4.4m to deal with reimbursing workers, then upped this amount in March to £7.9m. Now it thinks it will have to set aside £15.1m.

A difficult market has also battered Staffline’s training and recruitment divisions, and may cause the company to breach its lending agreements, chief executive Chris Pullen warned.

Staffline is now in talks with investors to raise around £30m by issuing new shares, and will use the cash to pay down its debt pile of around £63m. Shares tumbled 46pc, or 110p, to 129p.

The chief operating officer of specialist mortgage lender Charter Court Financial Services was cashing in on his company’s rise, as he sold off 210,000 shares for a total of £676,200.

John Nixon flogged the shares for £3.22 each, and Charter Court ended the day flat at 317.5p. The bank has climbed 40pc since it floated on the stock market in September 2017. By contrast, Mark Dixon – the boss of shared workspace company IWG – bought £836,769 worth of shares in his own company.

Dixon, who founded IWG as Regus in 1989, is still the company’s largest shareholder with a stake of nearly 30pc. He stumped up 333p for each share, pushing IWG up by 2.8pc, or 9.5p, to 347p. The resignation of Keywords

Studios’ chief financial officer, David Broderick, did not go down so well with investors.

Although the company has already found a replacement, in Rentokil Initial’s group financial controller Jon Hauck, shares in the video games business slid by 1.9pc, or 31p, to 1581p.

The FTSE 100 ended the day up 0.2pc, or 11.53 points, at 7357.31 points.

Packaging maker DS Smith had its worst day in more than four months, after analysts at Exane BNP Paribas warned on the company’s spending. Shares fell 5.1pc, or 17.9p, to 332.2p.