31/07/2013 - 08:45

Clough welcomes $430m M&R takeover

31/07/2013 - 08:45


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Clough welcomes $430m M&R takeover

South African engineering and construction group Murray & Roberts has made a $430 million offer to win full control of Perth-based Clough, in which it already holds more than 60 per cent of the stock.

The bid involves a $1.32 price for the remaining Clough shares and a 14 cent dividend.

Murray & Roberts currently owns 61.6 per cent of Clough, having built the stake in stages after initially acquiring a shareholding in 2003.

Murray & Roberts group chief executive Henry Laas said the acquisition was part of the group’s recovery phase.

The company had been mired in some costly international contractual disasters.

“To support our long-term growth objective we redefined the market sectors on which we wish to focus,” Mr Laas said in a statement.

“Broadly stated, we have identified energy (oil and gas and power) and mining and minerals as the sectors presenting the best medium-to-long-term growth opportunity, and which will most likely enable us to deliver the returns our shareholders expect.

“This proposed acquisition is strategically compelling, consistent with our long-term growth plans and the next logical step to fulfil our strategic objectives."

Clough chairman Keith Spence said the bid was good for its shareholders and, if all conditions were satisfied, Clough's independent directors intended to unanimously support the transaction.

"The proposal represents an oppotunity for Clough shareholders to realise a premium value for their investment," he said.

"The offer price is at a premium to the all-time-high price at which Clough shares have traded on ASX. The inclusion of a dividend will provide an additional benefit to Clough shareholders who are unable to utilise the attached franking credit."

Clough managing director Kevin Gallagher described the bid as an endorsement of the strategy Clough had executed over the past two years.

"They see Clough as a big part of their growth going forward," Mr Gallagher said.

He was confident M&R would retain Clough's branding and allow it to continue its current plans.

"Everybody recognises Clough as an Australian brand, it's 94 years old. They value the Clough brand," Mr Gallagher said.

The bid for Clough follows the recent disposal by Murray & Roberts of its manufacturing businesses.

Murray & Roberts said the proposed offer provided an attractive premium to the recent trading price of Clough shares to Clough minority shareholders.

It intends to fund the proposed acquisition through a combination of existing cash, cash on Clough's balance sheet, and modest acquisition financing.

The proposed transaction is subject to:

  • final approval by Murray & Roberts following the satisfactory completion of due diligence;
  • the negotiation, finalisation and execution of a Scheme Implementation Agreement  between Murray & Roberts and Clough; and
  • a unanimous recommendation by Clough independent directors in support of the transaction (subject to an Independent Expert determining that the transaction is in the best interests of Clough shareholders, and no superior proposal emerging).

Clough closed Tuesday at just over $1.11 per share. Today it jumped 31.5 cents to $1.43 per share.





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