Australia’s Lend Lease to buy Bilfinger unit for $1 billion

SYDNEY (BestGrowthStock) – Australian property developer Lend Lease (LLC.AX: ) has agreed to buy German construction firm Bilfinger Berger’s (GBFG.DE: ) local unit for at least A$1.055 billion ($1.05 billion), making it the country’s second-largest contractor and sending its shares 5 percent higher.

Lend Lease said it would pay a purchase price of A$960 million and a further A$80 million plus A$5 million per month from Oct 1 2010 to completion of the deal.

With the deal expected to close in the first quarter of 2011, the final price could be between A$1.055 and A$1.7 billion, depending on the timing.

Lend Lease, which announced earlier this month that it was in talks with Bilfinger, said it would buy the Valemus Australia unit in a deal being funded from existing cash reserves and a new debt facility.

At 2346 GMT, Lend Lease shares were up 3.6 percent at A$8.56 per share, after trading up as much as 5.1 percent in early trade.

Bilfinger pulled an initial public offering of Valemus in July, citing weak stock market conditions, just as Greek sovereign debt worries roiled global markets. It had hoped to raise up to A$1.1 billion in a float.

Valemus has a 4 percent share of an estimated A$120 billion in Australian construction and engineering work up for grabs each year. The deal makes Lend Lease Australia’s second-largest contractor after Leighton Holdings (LEI.AX: ).

“The acquisition of Valemus will increase Lend Lease’s capabilities and activities in the engineering and construction market and diversify Lend Lease’s position in this sector,” Lend Lease said in a statement.

It said it will fund the deal from existing cash reserves and a new 5-year A$225 million debt facility. Lend Lease said its gearing after the deal would be about 5.8 percent.

The acquisition was expected to provide earnings per share accretion to Lend Lease of around 15 percent on a full-year basis in the first full financial year ending June 30, 2012, it said.

(Reporting by Michael Smith and Victoria Thieberger; editing by Balazs Koranyi)

Australia’s Lend Lease to buy Bilfinger unit for $1 billion