The Board of Mouchel has rejected the revised share offer made by Costain.

In a statement, the Board said that it had "noted" the announcement by Costain Group plc.

Costain has made an indicative conditional proposal of 0.5947 new Costain ordinary shares for each Mouchel ordinary share, which based on the closing price per Costain share of 227.0p on 5 January 2011 (the last business day prior to the date of the Costain announcement), values each Mouchel ordinary share at approximately 135.0p.

The Mouchel Board said that, following consultation with its advisers, it had rejected the Costain proposal on the basis that it significantly undervalued the business.

In response, the Costain Board said it was surprised by Mouchel's response to its "significantly enhanced" proposal which, based on Costain's closing share price on 5 January 2011, values each Mouchel share at 135p per share, a premium of 138.9 per cent. to the closing Mouchel share price of 56.5p immediately prior to Mouchel entering the current offer period on 6 December 2010.

Costain said that the decision by the Mouchel Board had denied its shareholders the opportunity to have a major stake in a well capitalised, financially efficient, enlarged business, with a clear strategy for future profitable growth.