Cimic Makes Takeover Bid for Australian Engineer UGL -- Update

By Robb M. Stewart

MELBOURNE, Australia--Cimic Group Ltd., an Australian construction company controlled by Germany's Hochtief AG, has pitched a 474.9 million Australian dollars (US$360.3 million) bid for the shares in engineering firm UGL Ltd. it hasn't already purchased.

In a letter to UGL shareholders released Monday, Cimic said it was offering A$3.15 a share in cash. The price is final and the bid unconditional, it said.

Cimic already has amassed a 13.8% stake in UGL, which has seen its shares dive 42% since early June when it warned of delays and disruption to a liquefied natural gas plant it is helping build in Australia's north. The offer marks a 47% premium to Friday's closing price for UGL.

Cimic, a global contractor and leading contract miner, said its offer provides "cash certainty" for UGL shareholders against the risks and uncertainties of holding shares in the listed company. If the takeover is successful, it said it would reconstitute the engineer's board and delist it in Sydney but would continue the business and retain UGL's current employees.

UGL said its board would meet as soon as possible to consider the offer, and would provide advice to shareholders at that time. In the meantime, the board recommended investors take no action.

UGL's revenue and earnings have declined in recent years, although it narrowed its net loss in the year through June slightly to A$106.3 million despite a 3.6% slide in revenue to A$1.94 billion. In August, it said the value of its order book was A$4.8 billion and it continued to expect an about A$300 million rise in revenue in the 2017 financial year.

Cimic said it would fund the offer from available funds or existing debt facilities.

The Sydney-based company, founded in Australia in 1949 and previously known as Leighton Holdings Ltd., is almost 73% owned by Hochtief, which in turn is controlled by Spanish construction company Actividades de Construccion y Servicios SA. It occasionally has worked with UGL as part of consortia and through subcontracts, work that currently includes their involvement in rail work in Sydney.

Write to Robb M. Stewart at robb.stewart@wsj.com

(END) Dow Jones Newswires

October 09, 2016 20:35 ET (00:35 GMT)

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