Shares in Mouchel were soaring on the FTSE All Share after the outsourcing company was presented with a beefed up takeover offer from construction firm Costain.

Costain said that following extensive discussions with Mouchel it had tabled a "significantly enhanced proposal" for the company, valuing the company at 153.2 pence per share.

David Allvey, Chairman of Costain, said, "The strategic rationale for a combination has been widely supported and following extensive discussions with both sets of shareholders we have now significantly enhanced our proposal.

"We firmly believe that a combination of the two businesses is clearly in the best interests of both sets of shareholders and would bring resolution to the issues Mouchel faces for the benefit of its shareholders, customers and employees after a sustained period of uncertainty. Moreover, as part of a strong Costain group with a well-capitalised balance sheet, Mouchel would be better placed to compete effectively for major contracts.

"Having made our first approach to Mouchel seven weeks ago and as one of a number of options to deliver our strategy, we believe that our revised proposal is attractive to both sets of shareholders and should now encourage Mouchel's Board to engage with us without delay."

Mouchel simply said that it noted the enhanced offer, adding that it had received approaches from other parties since early December and that it was "actively reviewing" all proposals.

By 10:45 shares in Mouchel were up 23.20 per cent on the FTSE All Share to 140.25 pence per share, while Costain saw its shares decline 3.48 per cent to 215.00 pence per share.