WEIR Group hit an obstacle in its international expansion drive when a Danish rival upped the ante in the bidding for an Australian mining equipment supplier that both firms are courting.

A week after Glasgow-based Weir tried to gatecrash FLSmidth's agreed bid for Ludowici with a higher indicative offer, the Australian company said this has been trumped by the original suitor.

FLSmidth has raised the stakes by offering to pay 26% more per share than Weir indicated it would pay for Ludowici.

The conditional proposal made by Weir last week was pitched at (AUS)$7.92 per share and valued the company at £200m. On 23 January Ludowici's directors said FLSmidth had made a proposal at (AUS)$7.20 per share.

The latest proposal by FLSmidth is worth (AUS)$10 per Ludowici share, valuing it at £250m.

This implies the value of the target has increased by around 40% in less than a month.

The dramatic increase reflects intense buyer interest in companies that are positioned to cash in on the boom in commodities markets that is being driven by the insatiable demand for metals and coal in China.

Announcing its approach last week, Weir's chief executive Keith Cochrane said: "The potential acquisition would extend Weir's offering in minerals processing and expand our exposure to the attractive and fast-growing coal sector where Weir is relatively unrepresented."

The onus appears to be on Weir to respond to FLSmidth's latest move. Ludowici said its directors unanimously resolved to recommend shareholders approve the proposed transaction with FLSmidth subject to there being no superior offer.

The company added that it had ceased discussions with Weir and would no longer give it access to information for due diligence.

Phil Arnall, chairman of Ludowici, said: "The higher offer for Ludowici reflects compelling value for Ludowici shareholders ... We have had the opportunity to work alongside FLSmidth during this process and it is clear that they have a similar culture with respect to customers and employees."

Weir declined to say how it would respond.

Mr Cochrane has shown he is prepared to back bold expansion moves by Weir, which has made a series of big acquisitions overseas in recent months.

The company may hope its conditional proposal may yet prevail.

Weir has asked the Australian Government Takeovers Panel to rule that FLSmidth should not be allowed to raise its original bid.

On Tuesday the panel said Weir had drawn its attention to a report by Reuters on January 23 in which the agency said FLSmidth's chief executive said the $7.20 per share offer was final and would not be raised.

In a press release dated January 31, FLSmidth said it did not intend to increase its offer but reserved the right to do so.

Yesterday FLSmidth said it will take "whatever steps it deems appropriate in defending itself" against Weir's application to the panel.

Ludovici said "subject to the Takeovers Panel proceedings", shareholder and court approval, it expects the transaction to be completed by early June.

Separately Weir Group announced it had raised $1 billion by issuing loan notes to international investors. Weir issued three tranches of notes that are redeemable in seven, ten or 11 years with an average fixed-interest rate of 4.16%.

An undisclosed amount from the proceeds will be used to repay existing borrowings.

Weir Group finance director Jon Stanton said: "These funding arrangements provide us with enhanced flexibility to deliver our organic growth strategy and pursue our acquisitions agenda."