ACS plans share issue to fund Hochtief acquisition

By Chris Sleight18 October 2010

ACS has announced plans for a share issue to help fund its planned acquisition of a controlling stake in Hochtief. Shareholders representing 60% of the company's ownership have indicated they will support the issue of up to another 157 million ACS shares - an additional 50% on top of the company's existing capital - although ACS says it is unlikely to need all of these.

The proposal for a capital increase must be put to ACS shareholders at an extraordinary general meeting within 35 days. The company says this meeting is likely to be held in Madrid on November 19.

ACS says it plans to increase its shareholding in Hochtief to just over 50%, allowing it to consolidate the company's results, but still leaving a substantial free float. It is offering eight ACS shares for every five Hochtief shares.

To secure the additional shareholding it requires in Hochtief - it already owns just under 30% of the company - it will need to come up with some 22.4 million ACS shares to fund the deal. The company says it will first use treasury stock (shares it has previously bought back) to do this, but it is seeking approval to issue up to 157 million shares to allow it as much flexibility as possible.

As a result of this move, ACS has received an extension on the deadline from Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin), the German financial regulatory authority, by which it must make an official public tender offer for Hochtief. This is likely to push the completion of any offer back until at least January 2011.

In the meantime, Hochtief is thought to be considering its options to fend off what it currently views as a hostile takeover. It has applied to the Australian market regulator to try to force ACS to fully acquire its partially owned subsidiary Leighton, which would prove an expensive proposition. It is also reported to be considering 'poison pill' defences to dilute ACS' shareholding.

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