Hochtief takes ACS battle to next level

By Josie Cox

FRANKFURT (BestGrowthStock) – Hochtief AG made another push to scupper a low-ball bid from Spanish predator ACS on Wednesday after an Australian regulator refused to back the German construction group.

Hochtief and its Australian unit Leighton Holdings, of which it owns 54 percent, had asked Australian regulators to help them fend off ACS’s unwanted no-premium approach that values Hochtief at around 3.7 billion euros ($5.1 billion).

The Australian Securities and Investments Commission (ASIC) declined late on Tuesday to grant Hochtief’s request to force ACS to make an offer for both Hochtief and subsidiaries including Leighton, a Hochtief spokesman said.

That moves any decision on the matter to the next-higher authority.

“Following the decision by the ASIC not to require the Spanish construction company to submit a takeover offer for Leighton Holdings, it is now up to Australia’s Takeovers Panel to make such a decision,” Hochtief said.

ACS responded on Wednesday by saying it intends to proceed with its offer as planned, expecting the acceptance period for its all-share bid to begin at the end of November.

The group added it was confident that Australia’s Takeovers Panel would confirm ASIC’s refusal to back Hochtief.

“Following the successful completion of the offer, ACS will support Hochtief continuing its successful 27-year relationship with Leighton in its existing form,” ACS said in a statement.


ACS’s deliberately low-priced bid consisting of eight of its own shares for every five of Hochtief — in which it already holds 29.9 percent — is designed to let the Spanish company gradually up its stake without having to offer a premium for control.

At the minimum price set by German regulators, the proposed deal values Hochtief at 50.97 euros per share.

Shares in Hochtief initially dropped about 1 percent but were trading 0.2 percent higher at 61.86 euros by 1043 GMT, in line with Germany’s mid-cap index.

ACS shares eased 0.2 percent to 37.70 euros.

ACS’s primary goal of gaining a majority stake of Hochtief would cost about 735 million euros under the existing terms.

“Hochtief’s decision to appeal to the Takeovers Panel comes as a bit of a surprise to me, I don’t understand why ASIC did not grant Hochtief’s request, but I still don’t see how the takeover could go ahead,” one Frankfurt-based trader said.

He added he did not believe ACS would be able to foot the bill if it was forced to make a bid for Leighton too.

If the Spanish company ends up having to acquire Leighton and its subsidiaries too, the takeover bill would rise by at least $5.15 billion.

Hochtief has enlisted Credit Suisse, Goldman Sachs and Deutsche Bank as advisers and has already explored a number of options to foil the bid.

On Sunday, a German cabinet source told Reuters Germany is considering tightening its takeover laws in view of the acquisition attempt.

Chancellor Angela Merkel said last week Hochtief should remain based in Germany.

(Additional reporting by Anneli Palmen; Editing by David Holmes and Michael Shields)

($1=.7264 Euro)

Hochtief takes ACS battle to next level