Macmahon weighs up rival bids for construction business
By Helen Wright10 January 2013
Australian contractor Macmahon is at the centre of a bidding war between Sembawang, the Singapore-based subsidiary of Indian contractor Punj Lloyd; and Leighton, which are both vying to acquire its construction business.
At the end of December, Macmahon said it had finalised an agreement to sell the majority of its construction projects to Leighton for AU$ 20 million (US$ 21 million) as part of its new strategy to become a full service mining contractor.
However, before the Leighton deal could be approved by shareholders, Sembawang swooped in with a rival offer of AU$ 25 million (US$ 26 million) for the same assets, and later sweetened this offer to AU$ 38 million (US$ 40 million) for Macmahon’s entire construction business.
Macmahon’s construction business reported revenues of AU$ 991 million (US$ 1 billion) for the 12 months to the end of June, 2012, and gross profit of AU$ 26 million (US$ 27 million). Leighton’s proposal is to take on most of the construction unit’s assets, but not the entire unit.
Sembawang also insists that its initial offer to buy the same assets that Leighton is pursuing but for AU$ 5 million (US$ 5.3 million) more remains on the table.
Leighton is a majority shareholder in Macmahon, owning a 24% stake, and Macmahon has branded Sembawang’s offers “unsolicited, non-binding, incomplete and conditional”.
In a stock exchange announcement, president and CEO of Sembawang Richard Grosvenor said, “Regrettably Sembawang are now compelled to take a hostile position to get to the truth of the Leighton Macmahon transaction."
"It must be emphasised that Sembawang's Part A offer is for the construction businesses of Macmahon as going concerns, whereas the Part B offer matches the exact terms of Leighton's selective purchase of certain cherry picked projects plus Sembawang’s premium of 25%."
Macmahon said it planned to hold an Extraordinary General Meeting during February.