Cimic launches takeover bid for UGL

PERTH (miningweekly.com) – ASX-listed contractor Cimic has made a A$525-million takeover offer for engineering group UGL, offering shareholders A$3.15 a share for their holding in the ASX-listed company.

Cimic, which acquired a 13.84% stake in UGL on Monday morning, said the offer price represented a 47.2% premium to UGL’s last closing price on October 7, and a 44.2% premium to the company’s one-month volume-weighted average price. The offer price is final and unconditional.

UGL's stock rocketed 48% to A$3.18 a share following the takeover offer announcement.

The company traded at A$3.67 a share in June, before it updated the market about progress on two contracts for Inpex's Ichthys liquefied natural gas project. At the time, UGL warned that it had to set aside an additional $200-million to settle claims relating to the contracts, sending the company's stock down to A$2.14 a share.

Meanwhile, Cimic said that UGL’s competencies were complementary to the company’s existing operations, or would enhance Cimic’s capabilities in new activities.

If the takeover is successful, Cimic is planning to conduct a strategic review of UGL’s businesses in order to drive operational efficiencies and improve project delivery, as well as analyse the composition and value of the firms assets.

While the UGL board will be reconstituted, Cimic has vowed to retain the services of the current operational employees, and in cases where particular roles are no longer required, Cimic will attempt to identify opportunities for alternative employment within the group.

Cimic will also remove UGL from the Australian bourse, should its takeover prove successful.

UGL has told its shareholders that the company’s board will meet as soon as possible to consider the offer. In the meantime, shareholders have been advised to take no action.