Babcock denies takeover rumour

Melbourne: Australian investment management firm Babcock & Brown Ltd, whose shares have plunged amid the credit crisis, denied rumours it had received a takeover approach at A$2.50 ($2.09) a share from a European interest.

"The company is not aware of any such information nor is the company aware of any basis for such a rumour," Babcock said on Thursday in response to a query by the Australian stock exchange.

Babcock's shares have nearly doubled in value over the past two days in heavy trading, but are still down 94 per cent so far this year amid investor worries about companies with high-debt investment models as the global credit crunch bites.

Babcock & Brown's former chief executive, Phil Green, stepped down from the board last week, sparking talk he might be trying to arrange to take the company private, possibly through a management buyout.

"It's possible that now that he's off the board, he could be working on something," said Tom Elliott, managing director of hedge fund MM&E Capital.

Elliot played down the likelihood of an outsider taking over Babcock in a hostile move as executives own about one-third of the group. Executives who recently stepped down own about 10 per cent on top of that.

Babcock pointed to a ban on short selling this week as possibly having helped pump up its shares, which last traded up 31 per cent at A$2.22, off a high of A$2.74. The shares had stood at as high as A$31 in November last year.

It reiterated it was talking to parties who had approached it with ideas for its strategic review.