M&G rejects Babcock offer for Peterhouse

Tom Dobell, who runs the M&G Recovery Fund, said: "David Jackson [Peterhouse chairman] has done a good job over the years and he deserves a bit of support. We've been investors in Peterhouse for a long time and the company would be changing hands on the wrong basis. The valuation of Peterhouse's shares is too low."

Dobell accepted that Peterhouse had suffered recent hits and had made mistakes - "which it accepts" - but he believes Peterhouse is well placed to recover.

"There is very little loyalty in the City," Dobell said, "and it is disappointing to see companies sold for less than they are worth. I hold Peterhouse on my recovery funds as there is a good opportunity to restore value."

At the end of Babcock's first offer period, 42% of Peterhouse shareholders had agreed to sell and, by 27 May, the end of the three-week extension period, the acceptance figure had risen to 47%.

The indifference of shareholders has delighted Jackson, who founded Peterhouse. "It's all to play for," he told CJ. "Babcock has undervalued Peterhouse. Despite the bid being supported by six of Peterhouse's eight board directors, 53% of Peterhouse's shareholders still don't support the offer - instead they agree with the position that Simon Foster [group development director] and I have taken.

"Forty-two days, the duration of the two offer periods, is a long time when you are selling hard, and I'm delighted that Babcock has only got to 47%. If the bid was acceptable, it would have gone through by now."

Babcock chief executive Peter Rogers said he is "pretty comfortable" about the progress of his group's bid. It was announced at the end of the second offer period that a third offer period has been opened, running until 3pm on 14 June.

Jackson said he hoped that the Babcock offer would fail to go unconditional and would then lapse, leaving Peterhouse as an independent company.

"City rules mean that Babcock can't place a higher bid now," he said. "It would have been a better solution if it had increased its offer. I could have supported that. But this bid is not enough."

Jackson has discovered he does not require continued employment with Peterhouse to make a living. Three other offers of work have rolled in already, one of them in construction.