CIMIC lobs unconditional $174m bid for Macmahon Holdings

Macmahon shares surged over 30pc after the Spanish-backed construction group lobbed an unconditional offer.

CIMIC says it has received Foreign Investment Review Board approval for the bid.

Construction group Cimic has made a hostile $174.4 million bid for control of mining services outfit Macmahon Holdings as it looks to extend a recent acquisition streak.

The proposed offer would see Cimic secure the around 80 per cent of the company it does not own.

It comes in at 14.5c a share, 31.8 per cent above Macmahon’s closing price yesterday.

Macmahon shares in response to the news, closing just below the offer price at 14c, a 32 per cent gain. Cimic edged up 1.14 per cent to $34.50.

Immediately prior to the deal Cimic had raised its stake in the target from 19.55 to 20.54 per cent, with the move above 20 per cent forcing the need for a takeover offer almost a decade after the group first joined Macmahon’s register.

Macmahon delivered a quick response to investors this afternoon, merely advising against taking any action as it considers its stance.

The off-market deal has been flagged by Cimic as “final and unconditional”, with the offer price only able to be raised if a competing bid surfaces.

The Spain-controlled Cimic, formerly known as Leighton, has already received approval from the Foreign Investment Review Board for the proposed takeover, while the competition watchdog has also given the all-clear.

It has been active in the M&A space over the past 12 months, winning control of engineering groups UGL and Sedgman in deals worth a combined $780m.

The circumstances of both takeovers are very similar to the Macmahon play, with Cimic taking its offer direct to shareholders and ignoring the respective companies’ boards.

Cimic told Macmahon shareholders it intended to delist the company from the ASX should it win enough support.

A successful deal would also lead to a strategic review of operations, scrutiny of dividend and capital management policies and a shake-up of the group’s board.

It said it intends to retain the services of Macmahon’s current employees.

Macmahon shareholders will receive the bidder’s statement within two weeks.

Cimic was advised on the deal by Credit Suisse and Minter Ellison.