(Refiles to fix typographical error in seventh paragraph)
* Qatar Holding and ACS to meet Weds -sources
* ACS increases Hochtief bid ratio to 9-for-5
* ACS says confident improved bid will succeed
* Hochtief shares up 1.6 percent, ACS down 1.6 percent
(Adds Qatar/ACS meeting, shareholder comment)
By Sonya Dowsett and Matthias Inverardi
MADRID/FRANKFURT, Dec 15 (Reuters) - Spain's ACS turned up the heat on bid target Hochtief on Wednesday by sweetening an all-share offer to value its German construction rival at around 4.9 billion euros ($6.5 billion).
The Spanish group, which has been stalking Hochtief since September, said it had improved its bid to nine ACS for every five Hochtief shares from its previous eight-for-five offer, adding it was confident the higher bid would succeed.
ACS's amended offer was unexpected. It values Hochtief at 63.8 euros per share, a 2 percent discount to the market price as Hochtief shares rose 1.2 percent 65.13 euros.
ACS shares fell 1.4 percent to 35.3 euros as its shareholders digested the move. ACS had been widely expected to let its initial offer run its course.
And in another sign that ACS wants to wrap up the takeover quickly, sources said that the CEO of Qatar Holding, the Qatari investment vehicle which last week snapped up a 9.1 percent stake in Hochtief, would meet ACS on Wednesday.
If ACS can get its holding above 30 percent it can then gain control of Hochtief by taking its stake up to 50 percent, without having to buy out all the German group's shareholders.
Analysts said the move showed ACS was serious about the offer and would probably not raise its bid again, although one of Hochtief's top 12 investors dismissed the new bid as too low.
"I don't think the game is over yet. ACS still need to get to 30 percent before they can start freely buying Hochtief shares in the market. The current offer price is at a discount to the market price of Hochtief... ACS is quite stretched already so a higher share offering will certainly not be to their benefit. I would reject the current offer," said Kathleen Dewandeleer, a fund manager at Scottish Widows Investment Partnership, which has a 0.54 percent holding in Hochtief.
The German company made no immediate comment on the revised offer, but earlier on Wednesday it had urged its investors to reject ACS's initial low-ball bid on both financial and strategic grounds.
It opened the door to talks with ACS at the weekend, raising expectations that a three-month war of words with its largest shareholder would enter a more constructive phase. On Wednesday it said these discussions would begin shortly.
Spain's largest construction company, headed by Real Madrid soccer club president Florentino Perez, made a formal takeover bid -- initially worth around 4.3 billion euros -- for Germany's biggest builder two weeks ago.
It first expressed an interest in increasing its near 30 percent stake in September. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a Take-A-Look Reuters Breakingviews columns: For a Timeline, click on For a Factbox, click on For a Dealtalk, click on ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
NO DEFENCE
Hochtief Chief Executive Herbert Luetkestratkoetter has explored a number of options to fend off the bid, including seeking a white knight.
He risked a shareholder backlash by rushing in the capital raising deal with Qatar, selling a 9.1 percent stake at 57.114 euros per share, diluting ACS's holding.
The move added some muscle to Hochtief's defence by making it harder for ACS to get above the 30 percent threshold.
But it also angered leading ACS and Hochtief investor Southeastern Asset Management, which says Hochtief shares are worth 95 euros each.
Luetkestratkoetter said Hochtief had talked with Southeastern since Qatar's move, but he did not envisage acting on the U.S.-based investor's demand that he resign.
As a result of the capital hike, Southeastern's stake has been cut to 4.84 percent from just above 5 percent. The investor holds 5.06 percent of ACS, according to Thomson Reuters data.
The tender period for the bid runs through Dec. 29, and ACS must surpass the 30 percent threshold before then if it wants to buy Hochtief stock in the market and avoid having to start the bid process again. ACS has said its target is a controlling share of 50 percent, not all of Hochtief shares.
If ACS fails to reach the 30 percent stake, any new bid would need to be based on the volume-weighted average price for the past three months, making it more costly to gain control of Hochtief. ($1=.7506 Euro) (Additional reporting by Josie Cox and Sinead Cruise; Writing by Alexander Smith; Editing by Louise Heavens and Andrew Callus)