Leighton holdings shares have surged more than 11 per cent as Germany’s Hochtief moved to boost its stake in the company and take control of the board.
Investors pushed Leighton to a one year high on Monday, boosting the construction giant’s share price by around 30 per cent for the week.
But the celebrations could be short-lived as the corporate regulator examines the company’s market disclosure after the Australian Securities Exchange asked Leighton to explain the price spike.
If successful, the $1.15 billion takeover bid will give majority shareholder Hochtief Australia Holdings around three-quarters of Leighton’s shares and full control over company decisions.
Hochtief, which is majority owned by Spanish construction giant Actividades de Construccion y Servicios (ACS), plans to take over a majority of directorships and conduct an extensive efficiency review of Leighton following a scandal-filled 2013 for the Australian company.
Hochtief on Monday said it planned to make a $22.15 per share cash offer this month.
Investors cheered the news, pushing Leighton shares $2.28, or 11 per cent, higher at $23.00 at 1530 AEDT.
The share price rise comes after Leighton issued a statement to the Australian Securities Exchange (ASX) on Friday saying it was not aware of any reason why the company’s share price jumped last week.
The Australian Securities and Investments Commission (ASIC) is reviewing the share price spike.
Under the offer, Hochtief would increase its stake to almost 75 per cent, up from 59 per cent.
Hochtief said it intends to increase its representation on the Leighton board to reflect its majority interest in the company, but continues to support Leighton’s chairman Robert Humphris.
It also plans to conduct a review which will focus on making Leighton’s operating businesses more efficient.
Hochtief added that it intends to keep Leighton listed on the ASX, although the move could pave the way for Leighton to be delisted in coming years if the European owners further increased their stake under Australia’s creep provisions.
Leighton said its directors would consider the bid once it was received, but in the meantime it has advised its shareholders not to take any action.
Leighton grew its 2013 full year net profit by 13 per cent to $509 million.
The company has forecast 2014 net profit to be $540 million to $620 million, based on strong mining activity and better margins.
Leighton has previously said its directors have always carried out their duties with appropriate care and diligence, while former chief executive Wal King has denied any knowledge of alleged corruption in the company’s Iraq operations.
Morningstar analyst Ross MacMillan said Spanish company ACS had engineered the offer to increase its exposure to the Asia Pacific region.
“ACS has decided it wants to have further control over Leighton’s board and strategy, effectively cash flow and all of Leighton’s business structure and all of the decisions made by the board, including dividend payments,” Mr MacMillan said.
He said investors still believed there was significant value in Leighton with its good long-term growth opportunities.
