Allianz agrees to buy John Laing for $1.8 bn

LONDON: Allianz SE, Europe’s largest insurer, agreed to buy John Laing for £958m pounds ($1.81bn), trumping Henderson Group’s bid for the UK developer of schools, hospitals and roads. Allianz will pay 385 pence in cash for each Laing share, 30 pence more than Henderson’s agreed offer last month, the Munich-based company said. That’s 40% more than Laing’s close on September 13, the day before it first said an approach had been received.

Laing gives Allianz £330m of investments accumulated after the UK company quit construction to concentrate on government contracts to fund, build and run state assets. Laing has tripled earnings in three years through projects including London’s St. Barts hospital and the sale of stakes in concessions such as the M40 freeway.

“This is a very big premium and sets a new benchmark for this type of asset,” said Andrew Gibb, an analyst at Oriel Securities in London, which had a “sell” rating on Laing prior to Henderson’s offer. “We’ll have to wait and see if Henderson comes back. Their bid was already very punchy.”

Shares of London-based Laing rose as much as 38 pence, or 11%, to 393 pence, the highest in more than five years, and were trading at 391.5 pence as of 10:50 am in the UK capital. That’s 6.5 pence higher than the bid from Allianz, which will also pay 138 pence for each preference share. Henderson was trading down 4.75 pence, or 4.2%, at 107.25 pence. Allianz was little changed at 146.44 euros.

Banks are targeting infrastructure assets for their steady earnings and dividends. Goldman Sachs is raising a $3 bn fund, while JPMorgan Chase and Morgan Stanley may follow suit. Australian investment banks including Macquarie Bank and Babcock & Brown are also flocking to Europe amid a dearth of assets at home.

“Laing represents an opportunity to acquire a high-quality originator of infrastructure investments,” Allianz said in the statement.