A bidding war has emerged for infrastructure specialist Hyder Consulting (HYC), making it the top riser on the FTSE, up 8.5% to 700p. The fact that the share price has exceeded the latest offer (680p from Japanese consultant Nippon Koei) implies that the market expects further interest, potentially Dutch engineer Arcadis raising its original 650p approach (31 Jul) or a third name entering the fray.

Hyder has long been mooted as a takeover target by a foreign company seeking to exploit the small cap's rich position in the UK market. A profit warning in February due to issues in Australia and the Middle East hurt the share price and perhaps triggered rival operators to run the numbers on the business.

HYC - Comparison Line Chart (Rebased to first)

Engineering consultants are becoming rare entities on the London stock market with Hyder the latest in a string of names to receive bid approaches. Hyder's bid war bears similarities to sector rival Scott Wilson which was subject to a tug of war in 2010 between US engineers URS and CH2M Hill. In 2012, another quoted peer was delisted from London when WSP was acuired by Canadian group Genivar.

Nippon Koei's approach for Hyder values the business at £268.1 million. The 680p cash offer per share is a mere 4.6% higher than Arcadis' offer. The latter has issued a statement acknowledging the rival offer, saying it will respond shortly.

The Japanese group wants to use Hyder to help fulfil its ambitions of becoming a 'top tier global engineering consultancy'. It says Hyder would be run as a standalone division and that its offer is not predicated upon cost synergies.

Arcadis wants to use Hyder to deepen its capabilities in global design and engineering, accelerate its growth strategy and benefit from cost synergies.

Issue Date: 08 Aug 2014