An ex-Leighton Holdings executive has accused his former employer of cherry picking Macmahon Holdings' projects, after his Indian-owned company made a surprise counter-bid for Macmahon's construction business.
Singapore-based Sembawang Engineers & Constructors yesterday submitted an offer to buy the troubled unit as a going concern, or replicate Leighton's $20 million asset purchase deal signed last week with an extra $5 million thrown in.
However, Sembawang's plan to conduct due diligence by the end of this month could be stymied by an exclusivity period in place until Macmahon shareholders vote on the Leighton deal in mid-February.
Sembawang is owned by New Delhi-based Punj Lloyd, a 20.5 billion rupee ($358 million) listed engineering and construction conglomerate.
Sembawang chief executive Richard Grosvenor said Leighton had used its clout as Macmahon's biggest shareholder to secure an advantageous deal.
"There was no open invitation previously before on cherry picking of projects and in my personal opinion I think it's wrong," Mr Grosvenor said.
He urged Macmahon's independent directors to consider an offer in the best interests of shareholders.
Sembawang made the two-part bid in a letter to Macmahon yesterday morning and later put out a media release announcing the bid.
Macmahon did not inform the market of the offer yesterday, despite its share price rising 12 per cent. The stock has closed up 13 per cent on Wednesday.
Managing director Ross Carroll said there had been insufficient detail in the offer. Semabawang would need Leighton's consent to conduct due diligence.
"Effectively, they can't really put forward a meaningful offer until they've received the chance," Mr Carroll said. "It won't be easy for it to happen."
A Leighton spokesman said the exclusivity arrangement restricted Macmahon's response to any competing transaction.
Macmahon launched an $80 million capital raising last month in which Leighton participated. The construction unit was tipped to lose up to $100 million on three projects that turned sour.
Mr Grosvenor said Sembawang's preferred option was to buy the construction unit outright.
The company claimed to have been eyeing Macmahon's construction business for four years. The two sides had held talks last year on conducting joint ventures but not about an acquisition.
Mr Grosvenor began his career with Leighton subsidiary Thiess in the 1980s.