Leighton Holdings and its possible new big shareholder from Spain seem to have sorted out their impending relationship.
In a statement to the ASX yesterday, Leighton said it had settled on measures to protect its minority shareholders if Hochtief of Germany, its current major shareholder is acquired by its Spanish suitor.
Leighton says it has concluded discussions with Actividades de Construccion y Servicios (ACS), who has been bidding for Hochtief, which owns about 54% of Leighton.
Leighton shares fell early 60c to $31.36 on the immediate wake of the news, but recovered to end down just 2c at $31.91.
Yesterday’s statement said the resulted in a formal undertaking by ACS that Leighton said enshrines the existing governance arrangements in place between Leighton and Hochtief.
"ACS has confirmed that it does not intend to make any changes to the current arrangements which exist between Leighton and Hochtief," Leighton chairman David Mortimer said in a statement.
"The existing governance arrangements, which have been in place for a long period of time with Hochtief, have contributed substantially to the value created for all of Leighton’s 67,000 shareholders. ACS has confirmed that it does not intend to make any changes to the current arrangements which exist between Leighton and Hochtief," said Mr Mortimer.
The undertakings by ACS provide commitments that Hochtief does not intend to increase its shareholding beyond 55%, and that it will have the right to appoint up to four of the 12 Leighton directors.
"They also commit to the structure and current name of each Leighton group remains, and the full support of Leighton’s management in developing the company in its current form and in its current business sectors.
The other Leighton directors shall be either independent non-executive directors or executive directors;
- The Leighton Chairperson shall be one of the independent non-executive directors;
- Maintaining the structure and current name of each group; and
- Fully supporting the Leighton management in developing Leighton on the basis of the existing Group and divisions business plans into a multi-disciplined Group operating in the areas of construction, mining, telecommunications, environment, services, property development and any other business approved by the Leighton Board.
"We believe that ACS’s agreement to provide certain governance undertakings should protect and enhance value for Leighton’s many stakeholders and specifically its minority shareholders," Mr Mortimer said.
German-based Hochtief has been a major shareholder in Leighton since 1983.
Under the governance arrangements between the two companies, Leighton has operated under an independent board and management.
ACS is planning to build its stake in Hochtief via a share based acquisition scheme. ACS is, like many of companies in Spain, especially in construction, short of cash because of the GFC and recession.
It no doubt understands that Leighton is the only consistently profitable part of Hochtief, with very good growth prospects in Asia, India and the Middle East, as well as a strong position in Australia.
