CONSTRUCTION firm Costain stepped up its pursuit of struggling outsourcer Mouchel by unveiling a sharply higher takeover proposal.

Maidenhead-based Costain returned with a new all-share offer worth more than £150m after Mouchel’s board rejected a previous approach in December.

Costain said its offer, which is subject to a number of pre-conditions, was 27.6% higher than its previous approach and would give Mouchel shareholders a 51.7% stake in the enlarged company should a deal go ahead.

Chairman David Allvey said there was compelling strategic rationale for combining the two firms and creating a group with the critical mass to meet demand from customers for larger and longer-term bundled services.

The interest comes after Mouchel’s shares hit an all-time low of 56.5p in early December – from a year high of 268p – amid concerns over Government spending cuts and as it holds talks over the refinancing of its debt pile.

Costain, which is focused on the infrastructure, environment and energy sectors, said a combination with Mouchel would create a company with a combined order book of more than £4bn.

Costain also issued a trading update in which it reported a forward order book of £2.4bn.

Recent contract wins have included a joint venture deal to upgrade London’s Bond Street underground station, plus a highways contract for Neath Port Talbot Council and the construction of four schools in Lewisham, south London.