Broker snap: Costain bid 'makes sense'

22nd Dec 2010 12:40

Panmure Gordon likes Costain despite the construction and engineering group's recent bid for support services group Mouchel being rejected.Costain's approach was made at 0.5135 new Costain shares for each Mouchel share, which values the latter at 106p.Even though Mouchel rejected the offer, the broker notes that the bid target has a number of large shareholders with significant stakes which "will obviously play an important role," says analyst Andy Brown."We maintain our positive stance on both companies as strategically the deal makes sense for Costain while for Mouchel it gives shareholders the opportunity to continue to benefit in longer term infrastructure attractions," Brown adds. The broker sticks with a 'buy' recommendation and target price of 290p.