31/10/2014 - 13:35

Corporate deal may boost GCS options

31/10/2014 - 13:35

Bookmark

Upgrade your subscription to use this feature.

Takeover speculation continues in the state’s equipment hire sector, with plenty of interest in Global Construction Services.

Corporate deal may boost GCS options
ADDING UP: GCS was forced to absorb a $1.8 million write-off as a result of the collapse of Forge Group. Photo: Attila Csaszar

Takeover speculation continues in the state’s equipment hire sector, with plenty of interest in Global Construction Services.

Global Construction Services has given the strongest indication yet that a corporate deal could be the best way for it to capitalise on new opportunities in a post-mining boom market.

The listed labour and equipment hire business has been the subject of persistent takeover speculation for weeks, and has been linked with a number of unnamed suitors, allegedly including larger contractor operations and the deal-hungry private equity groups.

GCS has brought UBS on board to assist it, but group managing director Enzo Gullotti was insistent the corporate adviser had not been given any mandate and he denied it was working on a defence strategy.

GCS may yet join national contractors Tenix Holdings and Transfield Services, which have both been the subject of major takeover deals in recent weeks.

Downer EDI successfully bid $300 million for Tenix in mid October and Transfield has received a $1 billion takeover offer from Spanish giant Ferrovial, which is keen to increase its exposure to China.

GCS expanded rapidly to meet the seemingly insatiable demand from the Western Australian mining sector only to be caught short when projects were scaled back, delayed or shelved in the face of weaker commodity prices.

GCS’s revenue slumped by 20 per cent for the year to June 30 and its net profit shrunk 46.8 per cent to $8.1 million. It was also forced to shoulder a $1.8 million write-off as a result of the collapse of Forge Group.

The company is understood to have put the business squarely in the sites of a number of larger suitors as well as the private equity groups.

Mr Gullotti would not reveal where the interest was coming from except to say it was assessing opportunities and that nothing had been put to it “in writing”.

However, he admitted some sort of corporate deal could deliver the business access to funding and a stronger balance sheet to pursue the national expansion of the business.

“Everything is for sale at the right price, but that’s a price determined by the shareholders, not me,” Mr Gullotti said.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options