Cimic Makes Takeover Bid for Australian Engineer UGL -- Update
October 09 2016 - 7:50PM
Dow Jones News
By Robb M. Stewart
MELBOURNE, Australia--Cimic Group Ltd., an Australian
construction company controlled by Germany's Hochtief AG, has
pitched a 474.9 million Australian dollars (US$360.3 million) bid
for the shares in engineering firm UGL Ltd. it hasn't already
purchased.
In a letter to UGL shareholders released Monday, Cimic said it
was offering A$3.15 a share in cash. The price is final and the bid
unconditional, it said.
Cimic already has amassed a 13.8% stake in UGL, which has seen
its shares dive 42% since early June when it warned of delays and
disruption to a liquefied natural gas plant it is helping build in
Australia's north. The offer marks a 47% premium to Friday's
closing price for UGL.
Cimic, a global contractor and leading contract miner, said its
offer provides "cash certainty" for UGL shareholders against the
risks and uncertainties of holding shares in the listed company. If
the takeover is successful, it said it would reconstitute the
engineer's board and delist it in Sydney but would continue the
business and retain UGL's current employees.
UGL said its board would meet as soon as possible to consider
the offer, and would provide advice to shareholders at that time.
In the meantime, the board recommended investors take no
action.
UGL's revenue and earnings have declined in recent years,
although it narrowed its net loss in the year through June slightly
to A$106.3 million despite a 3.6% slide in revenue to A$1.94
billion. In August, it said the value of its order book was A$4.8
billion and it continued to expect an about A$300 million rise in
revenue in the 2017 financial year.
Cimic said it would fund the offer from available funds or
existing debt facilities.
The Sydney-based company, founded in Australia in 1949 and
previously known as Leighton Holdings Ltd., is almost 73% owned by
Hochtief, which in turn is controlled by Spanish construction
company Actividades de Construccion y Servicios SA. It occasionally
has worked with UGL as part of consortia and through subcontracts,
work that currently includes their involvement in rail work in
Sydney.
Write to Robb M. Stewart at robb.stewart@wsj.com
(END) Dow Jones Newswires
October 09, 2016 20:35 ET (00:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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