India-owned Sembawang Australia has moved to trump rival Leighton Holdings with a new $38 million offer to buy MacMahon Holdings' construction and rail businesses.
The new offer is well above the current $20 million agreement Leighton struck on Christmas Eve to just buy the construction business.
Macmahon is looking to become a dedicated full service mining contractor.
Sembawang's offer follows it threatening Macmahon with legal action and accusing it of misleading shareholders by not providing due diligence or telling the market about its November offer to buy the business.
Macmahon countered by citing an exclusive agreement with Leighton - its largest shareholder - preventing it granting due diligence without its agreement and said the only Sembawang proposal it received was a conditional one on January 3.
Sembawang has released an email exchange between its chief executive Richard Grosvenor and Macmahon boss Ross Carroll offering to buy the business in November.
Its lawyers have also written to Macmahon reminding them of fiduciary obligations to shareholders to consider rival offers but Macmahon says no legal proceedings have been initiated against it.
Sembawang has also alternatively offered to pay $5 million more than the current takeover agreement ($20 million) to buy the construction business, but not all assets and not the rail business.
Sembawang Australia is a wholly-owned subsidiary of engineering and construction group Punj Lloyd.
Macmahon is due to hold a shareholder meeting in February and said its board would consider the new proposal.
Macmahon shares jumped 5.5 percent in morning trade but retreated to close half a cent, or 1.82 per cent, higher at 28 cents and are up nearly 25 per cent since the start of 2013.