Babcock International, an operator of submarine bases for the Royal Navy at Faslane and Plymouth said today that the British defense services rival VT Group has accepted its takeover offer worth £1.33 billion. VT had previously rejected the offers of £1.14 billion and £1.2 billion made by Babcock.

According to the deal, Babcock will pay VT shareholders 361.6 pence in cash and 0.701 new Babcock shares for each share they hold. The deal offers a premium price at 45% on the group's closing price in the month of February. The offer made by Babcock's is worth 734.9 pence per share.

The merger of the companies shall craft a sturdy play in the defense, nuclear, critical infrastructure and international operations sectors.

"The acquisition of such a high quality and complementary business is in line with our strategy to be the leading engineering support services company in the UK," said Mike Turner, chairman of Babcock.

VT, a major player in the booming market for outsourced government services, said that the takeover offer of Babcock represents an attractive proposition for its shareholders.

The new company made after the merger of these two giant is expected to be valued at £2 billion, according to the market analysts. The current share holders of VT will own about 36% in the new company. The shareholders of VT group will now vote on whether to accept the offer of Babcock or not.