Blue Circle Industries yesterday said it would fight fire with fire, by offering its shareholders £800m cashback to counter a cash bid from Lafarge.
The company will launch a share buyback programme, worth 100p a share, and will dispose of £400m of assets, outlined in yesterday's final defence document.
Rick Haythornthwaite, BCI's chief executive, said: "Our shareholders have been saying they want our exciting future but they want some cash too. This buyback provides both."
Lafarge responded by saying that the buyback showed Blue Circle has "abandoned all pretence" of a long-term strategy. "It has resorted to stretching its balance sheet and compromising its much-vaunted acquisition strategy in an 11th-hour attempt to preserve its independence."
Mr Haythornthwaite said the buyback would be carried out in two tranches, to keep BCI's interest cover at "prudent" levels, and that it still left him with £500m to spend on acquisitions.
Analysts said the £3.4bn hostile bid battle had moved in BCI's favour, and Lafarge would have to pay a lot more than its current bid, valued at 420p a share, or 409p as Lafarge will not pay the final dividend.
Simon Brown, an analyst at Williams de Broe, said: "Clearly 420p is not enough, the share price is telling us that. Even at 450p, it could go either way." BCI shares yesterday closed down 2.5p at 427p. Mr Brown said Lafarge would need to bid 465p a share to secure BCI and that the deal would meet Lafarge investment criteria at up to 482p.
Earlier in the bid it had looked as though 450p would be sufficient to clinch BCI, but the positive impact of BCI's presentations and a comeback for "old-economy" shares had raised the stakes, analysts said. Mr Brown said it looked increasingly as if Lafarge did not have the appetite to raise its bid to the levels now necessary: "If they had come in at 430p or 435p to begin with, they could have had this hook, line and sinker. Now it's a different game."
Industry sources said it was possible Lafarge would simply walk away from the bid. But Mark Stockdale, of Warburg Dillon Read, said that he was convinced Lafarge would raise its offer and that it would not destroy value for them to pay anything up to 550p a share. "They need to come back with at least 450p [a share]," he said.
Today is Day 39, the last day for new information from BCI, and Day 46, the last chance for Lafarge to raise its offer, falls on Wednesday next week.
Yesterday's disposals announcement included plans to sell off BCI's 50 per cent holding in Aalborg, a Danish cement business, some UK property assets and some or all of its North American aggregates business.Reuse content