VT Group plc – Rejection of Babcock’s proposal

VT Group plc (“VT” or the “Company”) notes the announcement by Babcock International Group plc (“Babcock”) and confirms that it received a preliminary approach from Babcock on 3 February regarding a possible offer for the Company.

The Board carefully considered, together with its advisers, Rothschild and Merrill Lynch International, the preliminary approach, which relies on the return of the net cash proceeds from the exit of BVT, of which VT shareholders already have the benefit, and concluded that it was strategically unsound and at a level which substantially undervalued the Company and its prospects. The Board was unanimous in rejecting this approach.

This proposal follows on from two similar approaches made by Babcock last summer, which the Board of VT also considered carefully and rejected at that time.

Babcock’s proposal would have resulted in VT shareholders holding shares in the enlarged group. VT has pursued over the last five years a successful growth strategy of developing a broader based support services business, with reduced exposure to MoD. With the acquisition of DML in 2007, Babcock has by contrast increased its exposure to the MoD marine sector. A combination with Babcock would therefore represent a retrograde step in VT’s strategy and would increase VT shareholders’ exposure to MoD cut backs.

The Board of VT believes that Babcock faces serious strategic challenges and that VT has a clear and established growth strategy focused on support services that would be further enhanced by the addition of Mouchel.

This announcement has not been made with the consent of Babcock and there can be no certainty that an offer will be forthcoming or as to the terms of any offer.

The Directors of VT accept responsibility for the information contained in this announcement. To the best of knowledge and belief of the Directors of VT, who have taken all reasonable care to ensure such is the case, the information contained in this announcement is in accordance with the facts and does not omit anything likely to affect the import of such information