Murray & Roberts to fully acquire Clough

South African construction company Murray & Roberts has announced a cash offer to acquire the 38.4% of Australian contractor Clough that it does not already own. The offer has been made at AU$ 1.46 (US$ 1.32) per share, for a total cost of AU$ 434 million (US$ 393 million). This values Clough at some AU$ 1.13 billion (US$ 1.02 billion).

Clough is forecasting revenues of AU$ 1.5 billion (US$ 1.36 billion) for the financial year to the end of June 30, audited results for which are due shortly. Operating profits for the year are expected to be AU$ 90 million (US$ 81 million), and the company has an order backlog of AU$2.32 billion (US$ 2.1 billion). Murray & Roberts has held a stake in Clough since 2003.

The company is active in the energy & chemicals and minerals & mining sectors where it offers engineering and commissioning services and executes on-shore and near shore & marine construction projects

Murray & Roberts CEO Henry Lass said, “Our vision is to establish Murray & Roberts as the leading engineering and construction group in selected markets… To support our long-term growth objective we redefined the market sectors on which we wish to focus. Broadly stated, we have identified energy (oil & gas and power) and mining and minerals as the sectors presenting the best medium- to long-term growth opportunity. The proposed acquisition is strategically compelling, consistent with our long term growth plans and the next logical step to fulfil our strategic objectives.”

The company said the acquisition would create a focussed and diversified company with a footprint across Australasia, Southeast Asia and Africa. It added that it would allow Murray & Roberts to expand its international business, while opening up new opportunities for Clough, for example in the oil & gas sector in Africa.

Clough chairman Keith Spence said, “The proposal represents an opportunity for Clough shareholders to realise a premium value for their investment. The offer price is at a premium to the all time high price at which Clough shares have traded on the ASX [Australian Securities Exchange].”

The deal needs to be ratified by both companies’ shareholders, as well as various regulatory approvals.