Hochtief prepares for ACS takeover

By Josie Cox

FRANKFURT (BestGrowthStock) – German builder Hochtief (HOTG.DE: ) prepared to lose its fight for independence from Spanish predator ACS (ACS.MC: ) on Wednesday, revealing a deal with its creditors to allow for the change of control.

Hochtief’s lenders have waived their right to cancel credit lines should any shareholder hold more than 30 percent, Hochtief’s chief financial officer said in a newspaper interview, smoothing the way for the much more heavily indebted ACS to build a controlling stake.

He said lenders were happy that the company was well capitalized enough, thanks in part to its sale of a 9.1 percent stake to the government of Qatar in December. That move was seen at the time as a defense against the takeover.

“Considering the significant probability of (ACS being able to surpass the 30 percent threshold), we asked our lenders under what circumstances they would waive the change of control clauses,” CFO Burkhard Lohr told Germany’s Boersen Zeitung daily.

“In this sense, the capital increase and Qatar Holding’s share acquisition were worth gold.”

By the end of Wednesday, ACS needs to have control of more than 30 percent of Hochtief under a nine-for-five all-share offer to give it the right under German takeover law to increase its stake further by buying shares in the market.

ACS plans to raise its stake to 50 percent. It hopes to benefit from Hochtief’s stronger balance sheet, reduce its dependence on the bombed-out Spanish construction industry and bulk up to win more international projects.

Net debt at ACS stood at 9.08 billion euros ($11.94 billion) at the end of September. Hochtief puts its own debt at just 447 million euros.

On Wednesday, ACS said its stake was approximately 29.40 percent, or 22,637,567 voting rights. Sources familiar with the deal said last week that ACS’ calculations exclude a 2.5 percent stake pledged by key shareholder Southeastern Asset Management — which is also a top investor in ACS.

Burkhard said the agreement with creditors would protect Hochtief’s creditworthiness and also allow it to avoid paying ACS a special dividend.

ACS, headed by Real Madrid soccer club president Florentino Perez, last week said that it had cleared the way to own 30 percent through the support of Southeastern.

Hochtief’s sale of a 9.1 percent stake to Qatar diluted ACS’s stake in Hochtief to around 27 percent from 29.9 percent, but ACS responded by sweetening its bid, offering nine ACS shares for every five Hochtief shares, up from its previous eight-for-five offer.

The offer, formally launched on December 1 but initially mentioned over three months ago, expires at midnight on Wednesday.

ACS said that it will announce the total number of shares tendered during the period, on January 4.

Shares in Hochtief were trading 0.1 percent lower by 1001 GMT, narrowly underperforming Frankfurt’s 0.3 percent higher mid-cap index (.MDAXI: ).

Shares in ACS were trading 0.3 percent higher by 1001 GMT.

(Editing by Louise Heavens and Andrew Callus)

Hochtief prepares for ACS takeover