Allianz launches bid battle for Laing

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The Independent Online

John Laing, the project manager and owner of Chiltern Railways, yesterday became the latest infrastructure company to find itself at the centre of a takeover battle after the German insurer Allianz trumped a rival bid for the business with a recommended offer worth £957m.

Allianz is offering 385p for Laing's ordinary shares, topping an earlier agreed bid in September from the fund manager Henderson worth 355p. Shares in Laing closed 11 per cent higher at 394p last night as dealers bet on Henderson returning with a higher offer or another bidder entering the fray.

The bid battle for Laing follows a string of contested takeovers of infrastructure companies this year, including the airport owner BAA, the ports companies P&O and Associated British Ports and the water companies Thames and AWG, owner of Anglian Water.

Allianz, which has not previously been involved in any bids for infrastructure companies, said Laing's long-term contracts to run hospitals, schools, roads and police stations under private finance initiative (PFI) schemes would help match its insurance and pension liabilities.

The German insurer's interest in Laing is thought to have stemmed from a PFI deal it did with the company last year to help build some new police stations.

The Allianz bid has the backing of six big shareholders who between them own just under 52 per cent of Laing. If the deal goes through then it will have to pay Henderson a break fee of £9m. There is no break fee attached to the Allianz bid.

Allianz is paying £903.1m for Laing's ordinary shares and a further £54.3m to buy out its preference shareholders, valuing the deal at about £957.5m. The Henderson offer valued Laing at £887m. Unusually for an infrastructure takeover, Allianz is funding the bid from its own resources with no recourse to debt financing. Its offer represents a 40 per cent premium to the Laing share price before it admitted receiving a bid approach and an 8.5 per cent premium to the bid tabled by Henderson.

Laing has a portfolio of 50 PFI projects, including the redevelopment of Barts Hospital in London. Other PFI projects in which it is involved include the refurbishment of the Ministry of Defence's Whitehall headquarters and the building of the second Severn crossing. Its Chiltern Railways franchise, which operates rail services between London Marylebone and Birmingham's Snow Hill station, began in 1996. It was renewed in 2002 for a further 20 years.

Thomas Putter, the director of Allianz Infrastructure Holdings, the vehicle through which the bid is being made, said Laing's assets were "very attractive" to an insurance and pension provider. He also said Allianz would provide the capital to enhance Laing's position as a leading UK PFI contractor and support its international expansion.

In August, Laing reported a slight fall in first half pre-tax profits to £12.8m and said that the UK market for infrastructure projects was suffering from programme delays caused by a shortage of cash.

However, it also said it had been encouraged by the fact that two hospital PFIs in North Staffordshire and Leicester, which had been held up by the hospital review, had been given the go-ahead by the Department of Health.

Allianz is being advised by Dresdner Kleinwort and Greenhills is advising Laing.

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