Saturday 17th Aug, 2019

CIMIC launches $153.1m hostile takeover for Sedgman

The Sedgman-built West Senakin CHPP in Indonesia. Photo: Sedgman
The Sedgman-built West Senakin CHPP in Indonesia. Photo: Sedgman

CIMIC Group has made an unconditional final offer to acquire 100% of smaller engineering firm Sedgman, in a bid which values the company at $243m.

CIMIC, which was known as Leighton Holdings until April 2015, already owns 39.99% of Sedgman, an Australian based engineer which has worked in South East Asia, China, Africa and North and South America.

“By making this offer, CIMIC is seeking to increase its shareholding in Sedgman to a level where it can better support the future direction of Sedgman,” the company said in an ASX statement on Wednesday.

CIMIC has been a strategic investor in Sedgman for roughly 15 years, acquiring a 50% stake in 2001, prior to an initial public offering in 2006. Thiess, one of CIMIC’s existing subsidiaries, has joint venture arrangements with Sedgman on a number of projects.

“CIMIC intends to continue the business of Sedgman including Sedgman’s plans for increasing market and commodity diversification.”

The CIMIC bid is $1.07 a share, and can be accessed by Sedgman shareholders right away, with CIMIC appointing Credit Suisse to stand in the ASX, “and purchase on [CIMIC’s] behalf any Sedgman shares offered at or below the offer price.”

The $1.07 bid is a 35.4% premium on the closing price on Tuesday, but Sedgman shares promptly traded at $1.07 following the announcement.

Sedgman recommended its shareholders take no action in the immediate future, saying it would review the offer.

“As the offer is specified to be unconditional, CIMIC will not be able to withdraw the offer, therefore there is no need for shareholders to take any action at this time,” Sedgman told the market following the bid.

“The Sedgman board has formed a sub-committee, comprising the current directors but excluding the CIMIC nominee director, to consider the offer and will provide its recommendation to shareholders once it has done so.

“Sedgman will keep shareholders and the market fully informed of any further developments.”

Sedgman has appointed Citi as its financial adviser, and Norton Rose Fulbright as its legal adviser. It will also appoint an independent expert to give its opinion on the offer, in accordance with the requirements of the Corporations Act.