Babcock has confirmed that it rejected a merger proposal from Serco Group, claiming that the potential combination had no strategic merit.

News of the proposed merger was reported by The Sunday Times. According to the newspaper, Serco approached Babcock with the proposal to create a defence firm worth £4bn.

This was the second attempt made by Serco after a preliminary approach late last year, the newspaper added.

The first offer from Serco chairman Roy Gardner was rejected by Babcock’s Mike Turner, who will step down next month.

The report stated that Serco made a revised and more detailed offer to Babcock for an all-share merger in January.



In response to media speculations, Babcock confirmed in a regulatory announcement that Serco made an ‘unsolicited and highly preliminary’ proposal on 23 January this year for a potential all-share combination.

The company has not received any further proposals since then.

The Sunday Times claimed that the British firm intended to leverage its work at the Berkshire site and Babcock’s experience in maintaining the British Royal Navy’s nuclear submarine fleet.

However, Babcock said: “The board of Babcock, together with its advisers, carefully considered the proposal and unanimously rejected it, having 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.”

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Serco owns a stake in the Atomic Weapons Establishment at Aldermaston with Jacobs Engineering Group and Lockheed Martin as partners. The facility produces warheads for the UK’s nuclear weapons.

Last month, Serco Group’s US subsidiary Serco reached an agreement to buy Alion Science and Technology’s Naval Systems Business Unit.