Babcock says approach by Serco was turned down

Babcock runs the shipyard facility at Rosyth in Fife. Picture: Andrew Milligan

Defence firm Babcock, operator of Rosyth dockyard, has confirmed that it was approached by outsourcing giant Serco earlier this year with a proposal for a merger between the two businesses, but the idea was rejected.

Babcock said it had received an “unsolicited and highly preliminary proposal” from Serco on 23 January, regarding a potential all-share tie-up.

However, it was rejected by Babcock’s board, on the grounds that it “had no strategic merit and was not in the best interests of Babcock’s shareholders, customers or wider stakeholders”.

Both firms are currently key suppliers to the Ministry of Defence, with Babcock maintaining the Navy’s nuclear submarine fleet, while Serco looks after the Aldmerston atomic weapons factory.

The company’s statement was made in response to a report in a sunday newspaper, which said the merger proposal had initially been put forward by Serco’s chairman, Sir Roy Gardner, to his Babcock counterpart, Mike Turner.