Henlys' revised cash-and-shares bid values the 6.1 per cent stake owned by Stephen Burton, the chief executive, Brendan Geary, the finance director and Richard Owen, a non-executive director, at more than pounds 18m.
The three were part of the team which bought Dennis from Hestair, the industrial conglomerate, in a management buyout in 1989. When the company floated in 1992, the directors' holdings were worth around pounds 7.5m.
A spokesman for the company said Mr Burton and Mr Geary were not planning to sell their stakes. If Henlys is successful, Mr Burton will become deputy chief executive of the new group, which would have a market value of around pounds 560m. Mr Geary will be an executive director. The spokesman said Mr Owen would not be part of the board of the merged group, but declined to say whether he would sell his holding.
The Dennis board yesterday recommended Henlys' improved bid of 0.7 Henlys shares and 150p in cash for each Dennis share. This is an increase of more than 60 per cent on Henlys' original pounds 190.2m all-share offer, and is more than 20 per cent higher than the pounds 255m cash bid by Mayflower.
Henlys' bid received a boost earlier this week when the Swedish industrial group Volvo, one of the world's biggest bus producers, said it would buy a 10 per cent stake in the company.
Henlys and Mayflower have been locked in a bitter battle for control of Dennis, which makes bus chassis, since Monday when Mayflower gatecrashed the planned merger between Henlys and Dennis. A spokesman for Mayflower said yesterday that the company, which last year abandoned a bid for its much larger rival Vickers, was "considering its options but it is certainly not pulling out". He noted that Mayflower was offering three times more cash than Henlys. Analysts said a counterbid by Mayflower was still possible.
Henlys, which specialises in bus bodies, said the deal would dilute earnings in 1999 but raise them thereafter. Henlys shares ended down 52.5p at 512.5p: Dennis rose 47p to 508.5p.