Australian contractor CIMIC Group has made a US$180m hostile takeover bid for Sedgman, a Queensland-based engineer in which it already holds a 37% stake.
CIMIC launched the bid after Sedgman rejected CIMIC’s demands to take on a CIMIC-nominated director and shrink the board of directors.
Australian media say CIMIC is on a drive to take more control of its subsidiaries.
The Sedgman board reacted to the bid by telling shareholders to take no action until it had hired an independent expert to review the offer.
Under takeover laws, CIMIC must keep its bid open for at least 30 days.
CIMIC, a New South Wales-based contractor formerly known as Leighton Holdings, is offering $1.07 a share for the remaining stock, a 35% premium on its closing price on Tuesday, 12 January. CIMIC said this was a final offer.
Sedgman, which constructs supporting infrastructure for mining operations in Australasia, Africa and South America had a revenue of $273m in 2014 and a pre-tax profit of $18m. Its shares have risen 58% in the past 12 months.
CIMIC is itself majority owned by German contractor Hochtief, which is controlled by Spanish contractor ACS Group.
Ben Brownette, an analyst at the Commonwealth Bank, told the Sydney Morning Herald that ACS had been successful at turning around parts of CIMIC as well as its controlling shareholder, Germany’s Hochtief.
He said: "there appears logic in the view" that Sedgman could be improved, adding that CIMIC could also target mining-related businesses such as Barminco and Ausdrill.
CIMIC voted against Sedgman’s remuneration report at its 2015 annual meeting, and opposed the election of three independent directors.
Photograph: Sedgman was the EPC contractor on the Mungari gold mine in Australia (Sedgman)
