Shares in Mouchel were soaring on the FTSE All Share in afternoon trading after the consulting company confirmed that it had received a takeover bids thanks to the declining value of its share price.
In an interim statement covering the period from 1 August to now Mouchel said that trading was slow due to reduced or delayed spending decisions by its public sector clients. The company said that while it was still cautious it is beginning to see greater clarity about client's budgets, as well as a rise in local authorities looking to outsource or work with the private sector.
Mouchel said that the steps it had taken to manage its business following the election of the Coalition government were proving successful and added that it is 90 per cent of the way to cutting its costs by £25 million.
By the end of November Mouchel's order book stood at £1.8 million, despite this the group said it was looking at selling its non-core businesses and possibly holding a rights issue in order to reduce its debt.
In a statement Mouchel confirmed it had received takeover offers but also indicated it was not willing to accept those offers as they currently stand.
"The significant fall in the Group's share price over the last few weeks - which is indicative of the currently challenging environment but is principally due to the concerns that exist over the successful completion of the re-financing - has resulted in recent approaches to the Company which would, if made, result in an offer being made for the Company for the purposes of the City Code on Takeovers and Mergers (the "Code"). As a result the Company is in an offer period for the purpose of the Code and a further announcement will be made in due course. The Board does not believe that these preliminary approaches reflect the true value of the Company."
The group added, "Our expectations for the year to July 2011 remain unchanged. Mouchel's immediate focus remains on managing our cost base, managing our cash well and helping our clients to maintain the highest possible levels of service to their customers and end-users. We expect the challenging market conditions of the last six months to continue for some time yet, but we also expect to see increasing long-term contract opportunities emerge in the first half of 2011. In the meantime, we continue to win new contracts and maintain great relationships with our clients. Our focused business strategy, established market position and our leading role in transforming essential services and sustaining vital infrastructure give us growing confidence in the medium and long-term prospects for the Group."
By 14:15 shares in Mouchel were up 33.63 per cent on the FTSE All Share to 75.50 pence per share.