Henderson lifts Laing bid to £1bn

The takeover battle for John Laing, the construction and rail company, intensified yesterday after the fund management group Henderson tabled a £1bn cash bid, trumping a recommended offer from the German insurer Allianz.

Henderson, which began the contest in September with a bid worth 355p-a-share, raised its offer to 405p, topping the agreed 385p bid which Allianz announced a fortnight ago.

Shares in Laing leapt to a five-year high of 422p as dealers bet that Allianz would come back with a higher offer still. In an attempt to head off the German insurer, Henderson's brokers, JP Morgan Cazenove, launched a dawn raid in an attempt to snap up 18 per cent of Laing at the 405p offer price.

Laing said it would consider the terms of the revised offer and make an announcement in due course. Significantly, the board stopped short of recommending the latest Henderson bid - a strong indication that it is hopeful that Allianz will return with an even higher offer.

The bid battle for Laing, which owns Chiltern Railways and has a portfolio of 50 private finance initiative (PFI) projects, follows a string of contested takeovers of infrastructure and utility companies this year. BAA, P&O, Thames and Associated British Ports have all fallen to foreign bidders in recent months while Anglian Water is the subject of a £2.2bn offer and Iberdrola of Spain is mulling a £12bn bid for Scottish Power.

Henderson is offering £950m for Laing's ordinary shares and a further £54.3m for its preference shares, valuing the bid at £1.04bn. Allianz, whose previous offer was worth £957m, said it was considering its position. If it succeeds in acquiring Laing it will have to pay a £9m break fee to Henderson.

Analysts said Allianz would have to bid at least 10p more to stand a chance of defeating the raised Henderson offer.

Laing is a leader in the PFI market with long-term contracts to run several hospitals, schools, roads and police stations. Its projects include the redevelopment of St Bartholomew's Hospital in London, the refurbishment of the Ministry of Defence's Whitehall headquarters and the second Severn crossing. Its Chiltern Railways franchise, which operates services between Marylebone and Birmingham, was renewed in 2002 for a further 20 years.