Engineering firm Babcock International today revealed an approach for rival VT Group worth more than £1 billion, but said it was given short shrift by its takeover target.

Babcock, which employs around 17,000 staff worldwide, said it had put forward a proposed deal worth 633.9p a share for Southampton-based support services firm VT - the former Vosper Thornycroft business .

It said VT's board had rejected the approach, which is worth around £1.14 billion, and had refused to enter takeover talks.

Babcock had already made two formal approaches to VT last year before sending a letter to the board on February 3 outlining its takeover rationale, Babcock confirmed.

The news comes as VT itself is striding ahead with takeover ambitions, having today upped its bid for outsouring and engineering firm Mouchel to £330 million.

Babcock said: ''It is disappointing that VT's board has declined to discuss this further with Babcock or to engage with a view to exploring terms which might be acceptable to them.

''Babcock believes it is in the interests of both companies' shareholders for Babcock and VT to work together towards an agreed transaction for the mutual benefit of all stakeholders.''

It said a takeover of VT would see the two firms cut around £27 million off combined annual costs if they were to join forces, with a further £6 million in tax savings.

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VT - which was not immediately available for comment - saw its shares race 14% ahead on news of the potential bid, which is priced at a 24.8% premium to last Friday's closing price.

VT Group employs around 12,000 people and, aside from its Hedge End headquarters, has major bases in London, Warrington and Surrey, as well as operations in America.

A VT spokesman said the board believed Babcock's offer was ''totally unacceptable''.

He added that a tie-up with Babcock would see it become heavily exposed to the marine defence sector - a volatile area it sought to exit last year when it sold a remaining stake in BVT Surface Fleet naval shipbuilding for £346 million to BAE Systems.

The move was made to allow VT to focus on its services businesses, covering defence, communications and education and skills.

But Babcock said: ''A combination with VT has significant industrial and commercial logic and would bring together two highly complementary businesses to create a large and focused international engineering support services company.''

It added: ''Through its enhanced range of engineering skills and knowledge, the enlarged group would be better placed to lead in complex bids, achieve greater work-share and deliver increased services and efficiencies for its customers.''

Together, the two firms would have operations across the UK, Australia, Canada, the Middle East, South Africa and America.

Babcock's UK sites include Devonport on the south coast and Rosyth in Scotland.

Its shares closed down 9% as investors digested the potential for a battle to secure a VT takeover