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UK waste management company Biffa has agreed to a takeover offer valued at £1.2 billion from private equity consortium Montagu Funds.

The offer of £3.50 per share was made by WasteAcquisitionco, which was formed by Montagu Funds, Global Infrastructure Partners and UCIL for the acquisition.

Biffa's board has recommended the deal to its shareholders, although the company said it was expecting another offer for the company from a rival group.

Biffa has been pursued by Montagu since September last year, when it received a preliminary proposal from a consortium comprising Montagu and HgCapital, which has since dropped out, of £3.30 per share.

Buckinghamshire-based Biffa rejected the offer as too low and rejected a second offer made by the consortium in December priced the same, finally agreeing to a revised preliminary offer of £3.50 per share, which was today confirmed.

Bob Davies, non-executive chairman of Biffa, said: "We are pleased to have reached agreement with Montagu Private Equity and GIP.

"Their offer recognises considerable value inherent in our market position and integrated business model, and I believe their investment plans will help Biffa maximise the opportunities presented by changing legislation to deliver growth into the medium term."

Biffa said it has continued to make good progress in the last four months, although the balance of profits compared to last year is anticipated to be more weighted towards resource recovery and landfill and power generation, rather than collection.

Shares in Biffa rose above the offer price in morning trading on the London Stock Exchange on hopes of a rival bid, reaching £3.66 at 09:20 GMT, an increase of 11.6 per cent from yesterday's closing price.