German insurer’s £958m offer may prompt a bidding war to take over PFI specialist
Allianz has put in an bid of 385p a share, 30p more than Henderson’s. Laing has announced it is recommending Allianz’s offer, which values the company at £957m. Several weeks ago it recommended the Henderson offer.
Allianz’s bid sent John Laing’s shares soaring to 395p and they continue to trade at this level, prompting speculation that Henderson could come back with a higher bid, or that another firm may enter the competition.
William Forrester, chairman at John Laing, said the firm would “benefit from accessing funds that attract a competitive cost of capital and an international network of financial services specialists”.
It is understood that Allianz is attracted to Laing because the length of a PFI contract is similar to that of an insurance policy, so the income generated by a PFI would match its own liabilities.
They are also keen to take advantage of the expected expansion of PFI and PPP into the rest Europe.
Allianz has already shown an interest in PFI.
Last year it bought 50% of the equity in four PFI projects managed by Laing. These were the Gravesend firearms training centre, the Durham and Cleveland firearms training centre, south-east London’s police stations and greater Manchester’s police stations.
If the Allianz deal goes ahead, Laing shareholders will have to pay a £9m break fee to Henderson for withdrawing the recommendation for its offer.
Break fees are negotiated by bidders to discourage the target from talking to other companies. There is no break fee associated with the Allianz bid.
Allianz’s move may prompt others to put in offers. Potential bidders include the Deutsche Bank Infrastructure Fund, the Australian bank Macquarie, HSBC, Spain’s Ferrovial,Balfour Beatty or PFI investor the Secondary Market Infrastructure Fund.