Bilfinger Berger sells Valemus Australia

Lend Lease has reached a deal with Bilfinger Berger to acquire its Australian subsidiary, Valemus Australia, for AU$ 960 million (US$ 966 million).

The news comes five months after Bilfinger Berger pulled a planned IPO of Valemus, the parent of engineering and construction companies Abigroup, Baulderstone and Conneq.

The German contractor had hoped to raise as much as AU$ 1.39 billion (US$ 1.38 billion) in gross proceeds from the spin-off of the company, but weak capital markets put a dampener on the process back in July.

Australian construction and real-estate group Lend Lease said the acquisition would increase its capabilities and activities in the engineering and construction market and diversify its position in the sector.

Group CEO and managing director Steve McCann said, "Valemus' strong balance sheet, diversified portfolio and significant project pipeline provide a strong platform for earnings growth".

Valemus has over 150 contracts currently in hand and has secured future revenue of US$ 4.9 billion, according to Lend Lease.

Bilfinger Berger said it would reinvest the cash from the transaction into the further expansion of its services business. It said that it expected to bank net cash inflow of US$ 658 million from the deal, after it has repaid a US$ 164 million inter-company loan to Valemus Australia upon completion.

Bilfinger Berger added that it would report capital gains from the sale of around US$ 210 million.

"The sale of Valemus Australia, which will generate an output volume of over US$ 3.9 billion in 2010, is a significant step for Bilfinger Berger in the reduction of the company's construction business as planned," the company said.

On top of the US$ 966 million deal consideration, Lend Lease will make further payments of US$ 79.6 million plus US$ 4.9 million per month from 1 October 2010 in lieu of 2010 profits not distributed.

The Sydney-based property developer said it would be entitled to all profits from 1 January 2010 onwards.

The deal is expected to close in the first quarter of 2011, subject to approval from Australian anti-trust authorities.