Shanks put up for sale after Carlyle offers £536m

Shanks yesterday told potential suitors that an offer of 150p a share would be enough to buy the waste management group. The move came after the US private equity firm Carlyle approached shareholders with a bid valuing the company at £536m, the equivalent of only 135p a share.

The group's shares jumped by 42.6 per cent after it released a statement to the Stock Exchange confirming that a buyout firm had made an offer, describing it as "a highly preliminary and unsolicited approach".

Shanks refused to name Carlyle, but did stress that it had the support of its two biggest shareholders, Schroders and Legal & General, in holding out for 150p, which would value the company at £595m. Other shareholders confirmed they would support a cash bid of 150p, which "would deliver an appropriate value to shareholders", Shanks said.

The unusual move of naming a selling price may encourage other private equity firms or trade buyers into a bidding war.

"At this stage there is no certainty that the approach will be consummated," said Nick Spoliar, an analyst at Altium Securities. "We believe that as a take-out price, 150p is a highly plausible platform." Any bid of 150p would reflect a 75 per cent premium to Shanks' closing share price of 90.1p last Friday.

Carlyle refused to comment yesterday, but the approach is not the first time the buyout group has made an offer for Shanks. Carlyle is understood to consider its offer to be friendly, while Shanks' statement yesterday contained none of the phrases usually associated with the rejection of a bid.

Shanks, which has a number of long-term concession contracts in place, is typical of the sort of company that private equity groups have targeted in the past. The company sold its English landfill operations to Guy Hands' firm Terra Firma five years ago, and now concentrates on recycling waste, with plants in the UK, the Netherlands and Belgium. It also has a power generation arm.

Other UK waste management companies, such as Biffa, are already owned by private equity firms.