Another bidder enters the fray for Spice

The Leeds-based group, which has been fighting off the advances of European buyout firm Cinven since May, yesterday revealed another bidder has tabled a conditional offer.

Analysts said the second bidder is also a private equity firm, and is likely to push the price up. Shares closed up almost 12 per cent at 63.25p.

"The group confirms that confidential discussions are taking place which may or may not lead to a formal offer being made," said the group to shareholders at its annual meeting yesterday.

Cinven's latest publicly disclosed offer, revealed early in July, valued Spice at between 218m and 229m but was rejected as undervaluing the group.

Spice has been under pressure from shareholders, including former chief executive Simon Rigby, to talk to Cinven. But Aviva, another big investor, has urged Spice not to sell out cheaply.

Analysts expect a successful bid to be in the range of 65p to 75p – valuing Spice at up to 264m.

"The overwhelmingly positive news is that another bidder has emerged," said one analyst.

"It creates a catalyst for one of them to pull the trigger sooner rather than later. If you're the only bidder there's no rush."

Another analyst added: "When you get competition involved the price inevitably gets pushed up.

"I think most shareholders will sell so they are just interested in getting the best price. I believe in three to six months we won't be having Spice as a listed company."

Spice, whose services include installing water meters and checking overhead power lines, said it expects a stronger second half performance thanks to higher activity levels and cost cuts. Offloading its loss-making gas business and other cost cuts have helped reduce net interest payments on its debt.

The group added its exposure to the public sector is just two per cent, and it has focused on sectors forced to spend due to regulations and environmental pressures.