Lendlease completes engineering arm sale

The transaction will see Acciona secure control of major contracts on projects such as WestConnex and Western Sydney Airport. Picture: AAP

Construction and real estate group Lendlease has finalised a deal to sell its engineering arm to Spanish conglomerate Acciona for $160m.

The completion of the transaction was announced by the $8.7bn Australian-listed company on Wednesday.

Acciona Australia will effectively be paying $152m for the business, stripping out costs linked to transaction delays.

The group had earlier reported the book value of its plant and equipment at about $150m last year so the transaction is valuing the rest of the business at about $2m.

Acciona Australia’s management, including Bede and Andre Noonan, will own 20 per cent of the business, with the Spanish group holding the remainder.

The Noonan’s gained the stake in the Acciona Australia business after the Spanish group purchased their family-run Geotech Group three years ago.

Acciona will buy eight key projects from Lendlease in a deal that also includes the project-related workforce and Lendlease engineering’s business development teams.

The transaction will see Acciona secure control of major contracts on projects such as WestConnex and Western Sydney Airport.

The sale comes after Lendlease in 2018 took a $500m hit on three roadworks projects, resulting in more than $2bn written off the company’s market value.

The problematic contracts, including those relating to the Melbourne Metro Tunnel, the NorthConnex M1/M2 9km tunnel project in Sydney and the Gateway Upgrade North and Kingsford Smith Drive highway widening projects in Brisbane, will be retained by Lendlease.

Initially, the price paid for the engineering arm was to be $180m when the deal was announced in December, but it has been reduced due to delays on the transaction.

It is a fraction of the $1.055bn price Lendlease paid for Bilfinger Berger’s Australian construction business Valemus a decade ago, which also included its services arm which is yet to be offloaded.

The price is one third payable upon completion, a further third at the end of 2020, and the rest in June 2021.

Working on the sale was Morgan Stanley and Gresham.