LONDON (Reuters) – British outsourcer Serco has made two attempts to merge with its bigger rival Babcock in a deal focused on the defence industry which would have created a company worth 4 billion pounds, The Sunday Times reported.
Serco made a preliminary approach late last year, according to the newspaper. Serco’s Chairman Roy Gardner contacted his counterpart at Babcock, Mike Turner, who rejected the offer, the report said.
Serco then returned with a more detailed proposal for an all-share merger in January, the newspaper said. That approach was also rebuffed.
Citing a source close to Serco, the Financial Times, which also reported the rejection of the two approaches, said Serco’s Chief Executive Rupert Soames remained interested in deals.
Babcock Chairman Turner is due to step down next month when he will be replaced by Ruth Cairnie.
The company, whose biggest customer is Britain’s Ministry of Defence, warned in May that it expects revenue and underlying operating profit to fall in 2019-20. It has a market capitalisation of just under 2.4 billion pounds.
Serco said last month it was spending $225 million on buying U.S. engineering firm Alion’s naval systems unit to expand in the fast-growing segment of supplies to the U.S. Navy.
Its market valuation is around 1.7 billion pounds.
Both companies had no immediate comment outside of normal business hours.
(Reporting By Andrew MacAskill; editing by Diane Craft and Jane Merriman)