Macmahon rejects Sembawang offer

Australian contractor Macmahon has rejected bids by Sembawang, the Singapore-based subsidiary of Indian contractor Punj Lloyd, to buy all or part of its construction business, describing the offers as risky and uncertain.

Sembawang submitted two offers for the construction assets of Macmahon – one bid of AU$ 38 million (US$ 40 million) for the contractor’s entire construction unit, which reported revenues of AU$ 991 million (US$ 1 billion) for the 12 months to the end of June, 2012, and one offer of offer of AU$ 25 million (US$ 26 million) for the majority of the company’s construction assets and projects.

The second offer matched a rival bid made by Australia’s Leighton Holdings for the same assets, but was AU$ 5 million (US$ 5.3 million) higher.

Macmahon said Sembawang’s offers were “unsolicited, non-binding, incomplete and conditional”, and Sembawang confirmed that its first offer for the purchase of Macmahon's construction unit lapsed on 12 January without acceptance.

In a statement on 14 January, Macmahon said it also rejected the second offer to acquire selected construction assets.

“That revised proposal offers no certainty of financial upside to warrant potentially jeopardising the existing Leighton transaction. Macmahon considers that there is significant risk to completion of the Sembawang revised proposal, particularly given the requirement for joint venture and client consent for the novation of contracts.

“Further, Sembawang has continued a course of conduct which is inconsistent with maintaining commercial confidence,” Macmahon said.

At the end of December, Macmahon finalised an agreement to sell the majority of its construction projects to Leighton for AU$ 20 million (US$ 21 million) as part of its new strategy to become a full service mining contractor. Leighton is a majority shareholder in Macmahon, owning a 24% stake

Macmahon plans to hold an Extraordinary General Meeting during February to weigh up the Leighton offer.