Schroders backs Blue Circle against Lafarge

Blue Circle Industries, the cement producer facing a £3.65bn hostile bid, last night received a significant boost when its biggest shareholder declared support for the company.

The unusual move by Schroder Investment Management, which holds 5.5 per cent of BCI, comes well ahead of the 3 May closing date for accepting the offer from Lafarge.

A fund manager at Schroders said: "We're supporting the Blue Circle management as we do not believe that the offer reflects fair value for the company. There are some situations where we think it worth stating our position ahead of time, and this is one of them."

One analyst said Schroders' movewas a signal that it was not willing to accept opportunistic bids for Old Economy stocks.

"They're trying to galvanise a significant group of shareholders to stand firm on this offer. They're concerned that if this goes through, it might lead to another round of cheeky bids," he said. He added, however, that he still expected the 450p a share bid to be accepted by most shareholders.

Analysts said Lafarge had generated a lot of bad will among BCI shareholders by making a "mean" offer, which is, in effect, only worth 439p a share, as Lafarge is not paying BCI's final 11p dividend. Blue Circle shares closed down 1.5p at 430.5p. The Schroders move followed a meeting yesterday with BCI's management.