Hochtief seeks second Australian defence

By Chris Sleight27 October 2010

The Australian Securities and Investments Committee (ASIC) has announced it will not require ACS to fully acquire Leighton, should the Spanish contractor's hostile takeover of Hochtief go ahead. However, Hochtief has now referred the matter to Australia's Takeovers Panel.

Hochtief owns a 54.4% stake in Leighton, and it had hoped the requirement for ACS to fully acquire the Australian construction company would make the Spanish contractor's proposed hostile takeover of Hochtief too expensive.

In September ACS announced a hostile an all-share offer for Hochtief, with the aim of securing a majority stake in the company. In order to do this, the company would have to issue about € 880 million (US$ 1.2 billion) worth of new shares, and an extraordinary general meeting in November looks likely to approve this.

However, if ACS was also forced to fully acquire Leighton it would cost at least AU$ 6.06 billion (US$ 6.0 billion) at current market prices to buy the remaining 45.4% in the company. ACS would have to add a substantial premium to this to make the offer attractive enough to existing shareholders.

Takeovers Panel

With the ASIC now ruling that ACS would not have to fully acquire Leighton, should the Hochtief acquisition go ahead, Hochtief has referred the matter to Australia's Takeovers Panel with a view to getting the decision overturned.

The Takeovers Panel is an Australian Government body with 54 members drawn from law firms, accountants, financial institutions and corporations. It is a peer review body and the main forum and the main decision making body in Australia on takeover offers. The Panel will appoint a three-person team to decide on Hochtief's application.

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