Australia: CIMIC makes bid to buy rival UGL

Australian construction company CIMIC on Monday tabled an offer to buy Australian rival UGL Ltd. for about A$524 million ($398 million).

CIMIC, controlled by Germany-based Hochtief AG that is owned by Spanish construction company Grupo ACS, said in a statement it will offer A$3.15 per share for UGL, a 47 percent premium to its last close.

“CIMIC believes UGL’s competencies are complementary to CIMIC’s existing operations or enhance CIMIC’s capabilities in new activities,” the company said.

The Australian construction company on Monday took a 13.8 percent stake in Sydney-based UGL in a block-trade Monday,

In a response to the offer, UGL said that its board will meet as soon as possible to consider the offer and advised  shareholders to take no action in relation to the CIMIC announcement.

Worth mentioning, UGL said earlier this year it could face provisions of up to A$200 million (approx. US$151 million) for losses on the two contracts for the Inpex-operated Ichthys LNG project.

The company was awarded a $740 million contract for the structural, mechanical and piping construction in a joint venture with Kentz in 2014, and a $550 million contract by JKC, the project’s EPC contractor, for the construction of a combined cycle power plant in a 50/50 JV with CH2M Hill.

CIMIC said it intended to “conduct a strategic review” of UGL’s businesses to “drive operational efficiencies and improvements to project delivery” while also assessing the value of the target’s assets.

The company also received an approval from the Foreign Investment Review Board and the Australian Competition and Consumer Commission has “pre-assessed the proposed transaction and indicated that it does not intend to conduct a public review pursuant to section 50 of the Competition and Consumer Act.”

LNG World News Staff