John Laing soars on mystery takeover approach

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The Independent Online

Shares in Laing soared by 24 per cent to reach 362.5p after the company confirmed to the Stock Exchange yesterday afternoon that an interested bidder had come forward. Its shares closed at 341p, valuing the business at £795m.

A statement from the company warned that the approach, from an unnamed bidder, was at a "very preliminary" stage and there was no certainty a formal offer would be forthcoming.

Speculation on the identity of the bidder was last night centring on overseas players who are known to be on the acquisition trail. Spanish builders such as Acciona and Grupo Ferrovial have both been keen to expand abroad, as well as broaden their reach beyond construction work into public-private partnerships. The Spanish government has been operating similar public-private partnerships on toll roads and railways as in the UK. Ferrovial, in particular, is acquisition hungry. It has spent about €5bn since 1997 on acquisitions, including £81m on the takeover of the UK services company Amey, responsible for upgrading of the London Underground.

The Laing business has been undergoing a major structural change over the past five years to concentrate on the rapidly growing budget for public spending on roads, rail networks, hospitals and schools.

Cost overruns on major Laing construction projects had plunged the business in to difficulties in 2000, and in 2001, the management sold off its building business. A year later, it exited housebuilding and since then has been accumulating Private Finance Initiatives and Public Private Partnership projects, where private companies tender to build and manage Government infrastructure works.

Laing puts together consortia to bid for projects and then sub-contracts building and maintenance agreements to other oeprators. It also holds equity stakes in the projects, and these have been growing in value in recent years. Earlier this year, Laing said it expects to report a "very encouraging" fiscal year thanks to investment in transport projects for the 2012 London Olympics. Laing raised £100m earlier this year through a rights offer to help fund project bids and expansion into new markets.