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Waste collection and recycling firm Biffa agreed a £1.2 billion private equity deal takeover, but a counterbid could be looming as it confirms other interested parties.

Biffa's board has backed the 350p a share offer after from a consortium of investors including Montagu Funds, which used to own rival business Cory Environmental. Global Infrastructure Parnters are also involved, a fund previously involved in the 2006 takeover of London City Airport.

A rival bid is still possible. Biffa said in January that it had opened its books to several parties including the Montagu-led consortium. It confirmed today that these parties are still looking at the company's accounts and operations and 'continue to work on a possible offer'.

Biffa, which was spun off from Severn Trent in 2006, has 86 depots and collects more than four million tonnes of waste a year from around 75,000 industrial and commercial customers and over one million households.

Shares in Biffa jumped 12% to 366.25p, much higher than today's bid. This is saying that the market believes a counterbid could come in at 5% higher than the Montagu level.

Waste companies are seen as attractive targets because they have long-term earnings visibility and should benefit from increased government expenditure and tighter legislation on environmental issues.

Confirmation of the bid for Biffa helped push up shares in fellow waste management operator Shanks, rising 7% to 239.5p as investors hoped it would also be taken over.