Australian construction giant Cimic this week launched a hostile A$524m (US$395m) takeover of rival contractor UGL.
Cimic bought almost 14% of the company over the weekend, then announced yesterday that it would offer A$3.15 a share for the remainder, a premium of 47% to the closing price on Friday. It added that this offer was "final and unconditional".
When UGL’s management became aware that it was a target, it issued a statement urging shareholders not to accept the bid. It said yesterday: "The board of UGL will meet as soon as possible to consider the offer and will provide further advice to shareholders at that time."
UGL would be a substantial prize of Cimic.
It has a turnover of A$2.3bn ($1.7bn) and employs 7,000 people across Australia, New Zealand and South East Asia. It describes itself as a provider of end-to-end outsourced engineering, asset management and maintenance services in the transport, power, resources, water and defence markets.
Cimic, which is ultimately owned by Spanish contractor ACS, has said that if it wins control of UGL, it will "conduct a strategic review of UGL’s businesses in order to drive operational efficiencies and improvements to project delivery and analyse the composition and value of UGL’s assets".
It also plans to delist UGL from the stock exchange and "reconstitute" UGL’s board.
Cimic said it was confident of receiving regulatory approval for its bid. It said it had already received a green light from the Foreign Investment Review Board and the Australian Competition and Consumer Commission.
The deal will be funded using existing Cimic’s existing cash and credit lines.
Image: One of UGL’s particular strengths is in the rail manufacturing (UGL)