Construction giant CIMIC Group has proposed to acquire all the shares it doesn’t own in Perth-based Macmahon Holdings, with the deal valuing the target at about $174 million.
Cimic told the market this morning it had increased its stake in Macmahon from 19.5 per cent to 20.5 per cent, and that it intended to make a final unconditional offer to wholly acquire Macmahon for 14.5 cents per share.
The offer represents a 31.8 per cent premium to Macmahon’s last closing price, and a 45.6 per cent premium to the company’s three-month volume-weighted average price.
As Cimic already owns 246.6 million shares in Macmahon, it would need to pay about $138.6 million to acquire the shares it doesn’t own.
“In addition to the premium, the unconditional offer enables investors to exit all of their shareholding in Macmahon in an orderly manner and without the need to pay brokerage fees and with the opportunity to receive certain value of 14.5 cents.
If successful, Cimic said it would conduct a strategic review of Macmahon’s business, including reviewing the target’s dividend and capital management policies, and would also seek to de-list Macmahon from the ASX and restructure its board.
It also said it would retain Macmahon’s employees, and in cases where some roles are no longer required, it would attempt to find roles within Cimic for those affected.
Cimic will fund the acquisition using existing cash and facility agreements.
Spanish-controlled Cimic completed its acquisition of engineering and maintenance firm UGL in December, and subsequently de-listed the company from the ASX.
It also follows news in late 2015 that Cimic had bought out the shares it didn’t already own in mining services contractor Sedgman, as well as Brisbane-based real estate business Devine.
Cimic said today it has received Foreign Investment Review Board approval for the bid and that the Australian Competition and Consumer Commission had no concerns.
Macmahon responded to the offer, telling shareholders to take no action while the company's board considers its response.
But Macmahon's second-largest shareholder, Forager Funds Management, has told media that it is waiting for Macmahon's first-half earnings report to come out before making a decision on Cimic's bid.
Macmahon's first-half report is expected to be released in late February.
Cimic shares were one cent higher to $34.12 each at 10am.
Macmahon shares closed 31 per cent higher to 14.5 cents each.