Hochtief moves on Leighton

UPDATE 12.45pm: Shares in construction giant Leighton Holdings have surged after Germany's Hochtief move to boost its stake in the company and take control of the board.

If successful, the $1.15 billion takeover bid will give Hochtief Australia Holdings around three-quarters of Leighton's shares and full control over company decisions.

Hochtief, which is majority owned by Spanish construction giant Actividades de Construccion y Servicios (ACS), plans to take over a majority of directorships and conduct an extensive efficiency review of Leighton following a scandal-filled 2013 for the Australian company.

Hochtief said this morning it planned to make a $22.15 per share cash offer this month to acquire three out of every eight shares held by Leighton shareholders.

Investors cheered the news, pushing Leighton shares up $2.30, or 11.1 per cent, to $23.02 shortly before the close of trade.

The share price rise comes after Leighton issued a statement to the Australian Securities Exchange on Friday saying it was not aware of any reason why the company's share price jumped more than 12 per cent between Wednesday and Friday last week.

The Australian Securities and Investments Commission is reviewing the share price spike.

"We will review the run-up in Leighton's share price but it’s part of our routine market monitoring practices,” an ASIC spokesman said.

Hochtief recently increased its stake to nearly 59 per cent ahead of Leighton's financial results on February 20.

Under the offer, Hochtief would increase its stake to almost 75 per cent.

Hochtief said it intends to increase its representation on the Leighton board to reflect its majority interest in the company, but continues to support Leighton's chairman Robert Humphris.

It also plans to conduct a broad-based review of Leighton’s operating model that is being undertaken by Leighton management.

The review will focus on making Leighton's operating businesses more efficient.

Hochtief added that it intends to keep Leighton listed on the ASX, although the move could pave the way for Leighton to be delisted in coming years if the European owners further increased their stake under Australia's creep provisions.

In a statement, Leighton said its directors would consider the bid once it was received.

Meanwhile, it has advised its shareholders not to take any action.

Leighton grew its 2013 full year net profit by 13 per cent to $509 million.

The 30 per cent lift in underlying net profit to $584 million - excluding write-downs on property assets and investments - was above analysts' expectations.

The company forecast 2014 net profit to be $540 million to $620 million, based on strong mining activity and better margins as this year's record revenue of $22.6 billion was forecast to stay steady.

Leighton has previously said its directors have always carried out their duties with appropriate care and diligence, while former chief executive Wal King has denied any knowledge of alleged corruption in the company's Iraq operations.

Morningstar analyst Ross MacMillan said Spanish company ACS had engineered the offer to increase its exposure to the Asia Pacific region.

"ACS has decided it wants to have further control over Leighton's board and strategy, effectively cash flow and all of Leighton's business structure and all of the decisions made by the board, including dividend payments,” Mr MacMillan said.

The West Australian

Popular videos

Compare & Save

Our Picks

Compare & Save

More from The West