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Bid battle looms as Loxam makes takeover approach for Lavendon

Reuters

By Esha Vaish and Maiya Keidan

(Reuters) - European industrial equipment supplier Loxam SAS has made a takeover approach to rival Lavendon Group (LVD.L), setting the scene for a bid battle for the British firm which has provided aerial work platforms for Harry Potter films.

Shares in Lavendon, which last week received a 348-million-pound bid proposal from Belgian equipment supplier TVH Group, jumped as much as 7.7 percent on Monday to a two-year high of 220 pence.

That is well above TVH's proposal of 205 pence per share in cash, suggesting investors are hopeful of a higher offer.

Loxam said its proposal was also in cash, but did not disclose the value.

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Analysts said Loxam had made several acquisitions in recent years and Lavendon would fit well into its portfolio. TVH said last week buying Lavendon would help it expand its specialised equipment rental business.

Although TVH's proposal had by Friday won the backing of investors holding about 16.9 percent of Lavendon shares, the British firm's board had not backed it.

Lavendon, which gets nearly half of its revenue from the construction industry, asked its shareholders last week to take no action on TVH's proposal, citing concerns over execution risk and potential business disruption.

Analysts linked this to a lack of support from M&G, which is Lavendon's largest shareholder with a stake of 18.65 percent, according to a Nov. 22 filing. A spokeswoman at M&G declined to comment.

Panmure Gordon analyst Adrian Kearsey said he expected Lavendon investors to seek around 215 pence to 220 pence a share. The company's house broker Peel Hunt has a target price of 275 pence.

Lavendon on Monday asked shareholders to take no action on Loxam's approach.

Hedge fund firms Sand Grove Capital Management and MVN Asset Management increased their stakes in Lavendon after TVH's bid proposal last week.

($1 = 0.8041 pounds)

(Reporting by Esha Vaish in Bengaluru and Maiya Keidan in London; Editing by Susan Thomas and Mark Potter)