Costain increases its Mouchel takeover proposal again

Much of Mouchel's work is with government and local authorities

Construction group Costain has raised its offer for outsourcing firm Mouchel, after two earlier offers were rejected.

The latest cash and shares offer values Mouchel at more than £170m ($271m), up about 45% from its original offer.

Costain said that the offer of 0.5531 Costain shares and 30 pence in cash for each Mouchel share represents a 171% premium to what the share price was before the initial approach was made.

Mouchel is in talks with banks about refinancing its debts.

Last year Mouchel's shares slumped as a result of the UK government and local authorities cutting spending on the new infrastructure developments that the company provides.

Its shares hit an all-time low of 56.5 pence in early December, down from its year high of 268 pence.

The latest offer values the shares at 153.2p.

Mouchel said that the previous offers significantly undervalued the business.