Blue Circle Industries, the cement producer fighting a £3.4bn hostile bid, is believed to be planning a radical restructuring as a last-ditch defence.
Last week the company put forward a further plank of its defence against the offer from Lafarge - new cost savings targets - but industry sources expect BCI to follow this up with a far-reaching restructuring proposal.
Analysts said BCI's defence has been competent and professional, but not sufficient to save it from the French predator. Simon Goodfellow, an analyst at ING Barings, said: "They've done a great job of showing their value, but that's not enough. Something else needs to be put on the table. They must know that."
Lafarge is not expected to succeed at the current level of its bid, in effect 409p as it will not paying BCI's final dividend. It is thought Lafarge will have to raise its bid to between 450p and 475p. At that level, BCI's institutional shareholders are likely to accept, in the absence of an alternative from BCI.
Analysts said that if BCI wants to stay independent, or wants an offer from Lafarge of more than 500p, it will have to construct an alternative itself. It is hampered by the lack of a rival bidder. Options include giving cash back to shareholders, a break-up, a merger or acquisition, or disposal.
Rick Haythornthwaite, BCI chief executive, has privately remarked that he has "an ace up my sleeve". There is talk that BCI is lining up a merger with Southdown, the US cement producer that has put itself up for sale. Cemex of Mexico, the world's third-largest cement player, has also been spoken of as a partner or buyer of BCI's attractive US assets.
An industry source said: "This savings document [presented last week] is what we were expecting on Day 39. The fact that they've brought this out now suggests that they've got something else to come."
After a bid is launched, Day 39 is the last date in the takeover timetable for the defence to offer new information. Lafarge's bid is now frozen as it awaits regulatory approval from the European Commission, expected by 12 April. Brussels is not expected to have major problems with the bid. Once approval is received the bid proceeds from Day 37. BCI is expected to deliver its restructuring plan on Day 39.
So far BCI's defence has consisted of presentations on its Asian assets, its UK property portfolio and the £116m of annual savings it believes it can achieve. Taken together, these presentations are reckoned to have demonstrated an extra 100p a share of value. What is at dispute is whether that 100p should be added to BCI's current share price - 422.25p at Friday's close - or its share price of 314.25p before the bid was launched in January.
BCI's position has been bolstered to some extent in recent weeks by the positive impact of its defence presentations and the market comeback "old economy" shares have made.